Overview

If you are currently domiciled in Washington State and are considering changing your domicile to Nevada, it is important to understand both the legal requirements for establishing a new domicile and the significant tax advantages Nevada offers over Washington. This handout summarizes the key differences in state tax regimes, outlines the steps necessary to establish Nevada domicile, and highlights important considerations to ensure a successful transition.

Highlights

No State Income Tax: Neither state taxes wage or salary income. Capital Gains: Washington imposes a 9.9% excise tax on long-term capital gains for individuals domiciled in WA at the time of sale (excluding real estate and certain other assets). Nevada does not tax capital gains. Estate Tax: Washington has a state estate tax with a top rate of 35% and a relatively low exemption (~$3 million (indexed for inflation)). Nevada has no estate or inheritance tax. Sales and Property Taxes: Both states have relatively high sales taxes, but Nevada’s is lower. Property taxes are also lower in Nevada.

Why Change Domicile to Nevada?

Avoid Washington’s Capital Gains Excise Tax: By establishing Nevada domicile before selling intangible assets (e.g., stocks, business interests), you can avoid Washington’s 9.9% capital gains excise tax. Eliminate State Estate Tax Exposure: Dying as a Nevada domiciliary avoids Washington’s estate tax, which applies to the worldwide intangible assets of Washington domiciliaries. Lower Overall State Tax Burden: Nevada’s lack of income, capital gains, and estate taxes, combined with lower property and sales taxes, results in a more favorable tax environment for high-net-worth individuals and those with significant investment income or large estates.

Steps to Establish Nevada Domicile and Abandon Washington Domicile

Establish a Permanent Home and Physically Move to Nevada

• Own or lease home in Nevada.
• Spend the majority of your time in Nevada.
• Move your personal belongings and establish your primary residence in Nevada.

  Update Legal Documents and Registrations

• Obtain a Nevada driver’s license within 30 days of moving.
• Register your vehicles in Nevada within 30 days.
• Register to vote in Nevada and cancel your Washington voter registration.
• Update your mailing address to your Nevada residence.
• Use your Nevada address on all federal and state tax filings and other official documents.

  Shift Financial and Business Ties

• Open and use bank accounts in Nevada.
• Move your place of business or employment to Nevada, if possible.
• Update professional and business licenses to Nevada, as needed.

  Demonstrate Intent to Make Nevada Your Home

• Express your intent to friends, family, and business associates.
• Apply for in-state tuition or other state benefits in Nevada only.
• Do not claim Washington residency for any purpose (e.g., hunting/fishing licenses, property tax benefits).

  Minimize Ties to Washington

• Move your primary living arrangements to Nevada.
• Move as many personal and financial connections as possible to Nevada.
• Avoid using a Washington address for any official purpose.

  Document Your Move

• Keep records of your move, such as moving receipts, utility bills, and change-of-address confirmations.
• Maintain evidence of your physical presence in Nevada (e.g., travel logs, lease agreements).

  Be Consistent

• Ensure all your actions and documents consistently reflect your Nevada residency and intent to abandon Washington domicile.

Important Considerations

Burden of Proof: Washington presumes you remain domiciled there until you clearly establish a new domicile elsewhere. You must be able to demonstrate, with documentation and consistent actions, that you have made Nevada your permanent home. Owning Property in Both States: Merely owning property in Nevada is not enough; you must show that Nevada is your primary and permanent home. Timing for Tax Purposes: For capital gains and estate tax purposes, your domicile at the time of the taxable event (sale or death) is critical. Plan your move and major transactions accordingly.