Texas Residency: Benefits and Requirements

Texas Residency: Benefits and Requirements

Hey there! Thinking about making Texas your new home sweet home? You're not alone! This big-hearted state isn't just about cowboy hats and barbecue – it's a hotspot for folks who live life on the go, like digital nomads, world travelers, and remote rockstars. 

Why? 

Because Texas is more than just friendly faces; it's got some serious perks for your wallet and peace of mind, too.

In this guide, we'll dive into what it means to call Texas your official stomping ground, all the cool stuff you get from it, and how to make it happen. And hey, we’ll even do a little side-by-side with some other popular spots like Florida and South Dakota so you get the full picture.

TLDR:

Texas Domicile benefits and requirements

Ready to find out why having a home base in Texas could be your next great move? 

Let’s roll!

What is Domicile, and why is it important? 

Think of Texas as your trusty home base, the place where you hang your hat, even if you're off globetrotting or thriving in your work-from-anywhere job. It's not just about where you crash at night – it's about having a spot that the law recognizes as your own Texas turf.

Domicile is like your home field and, for our purposes here, Texas is the one we're rooting for. It's your permanent spot, the place you're tied to no matter where you jet off to.

If ‘domicile state' is your official home field, 'legal residence' is more like your temporary crash pad. This difference is important because it messes with your taxes and the advantages you can get from the state.

Tax implications

Taxes? In Texas, you can forget about state income tax. This is a big deal, especially if you're a high-earner.

Eligibility for state services

Even if you're not always in Texas, being a legal resident means you’re still a member of the community, participating in both the responsibilities and benefits like any other Texas resident. 

Your domicile state determines many of the rules you need to adhere to when it comes to all things legal. For example, upon death, Texas would be the state executing your will, which has a big effect when it comes to things like estate taxes.

Getting the lowdown on what makes Texas your home base is key to taking full advantage of what this unique state offers. Understanding this stuff means you can make smart decisions and enjoy the full Texas experience, even if you're not putting boots on the ground all that much.

Benefits of establishing domicile in Texas

Hey, globe-trotters and high-flyers! Thinking about where to plant your roots while you conquer the world from your laptop? Let's talk about why Texas is the new 'it' place for savvy nomads and world citizens. 

Here are the key benefits of choosing Texas as your domicile state:

Tax perks? Yeehaw!

• No state income tax 

How does keeping all of your hard-earned money sound? In Texas, there’s no chunk of your income heading off to the state, which means more dough for your adventures or your piggy bank.By avoiding state and local income taxes, depending on where you are currently domiciled you could save over 20% of your annual income. 

• No corporate income tax 

Running your empire from a hammock or a high-rise? Well, Texas won't ask for a slice of your corporate pie either. More profits stay with you, the boss.

• No estate or inheritance tax 

Got a treasure chest of assets? Pass it on to your descendants without the state dipping in. In Texas, what’s yours stays in the family, no estate or inheritance taxes in sight.

• Lower sales tax 

Even when you’re stocking up on gear for your next escapade, the sales tax won't make your wallet weep. It's a bit kinder here, meaning more savings on the stuff you need.

• No capital gains tax 

And for the money maestros, Texas plays it cool with your investments — no capital gains tax to worry about, so your savings grows at the highest rate possible.

Flexibility

• Ease of establishing residency 

Texas rolls out the welcome mat with a residency setup that’s almost as easy as ordering your favorite takeout online. 

• Cost efficiency 

From getting your paperwork to keeping your car legally on the road, Texas is all about keeping the costs down. That means more cash for living it up or tucking away for the future.

Get Started

Texas residency requirements

Ready to hang your hat in Texas? 

Here’s the lowdown on locking in your Lone Star status.

  • Intent to Establish Domicile: Prove you're not just here for the brisket. Get a Texas driver's license, register to vote, and update your address to something in Texas to show you're serious.
  • Physical Presence: You've got to spend some real time in Texas. No specific number of days, but enough to get a feel for those wide-open skies.

2. Timeframe:

  • General Timeframe: Generally, you should stick around for about a month before you declare yourself a true Texan.
  • Exceptions: If you're swapping a valid out-of-state license for a Texas one, you might be able to skip the 30-day wait.

3. Required documentation:

  • Proof of Residency: Bring on the paperwork! Think vehicle registration, Texas ID, utility bills, or a lease with your new Texas address.
  • Additional Documentation: In some cases, you might need to show where you work, where you've studied, or where you pay taxes to prove Texas is your home state.

4. Special considerations for digital nomads and expats:

  • Flexible Documentation: If your home office is wherever you open your laptop, Texas will work with you on what counts as proof of residency.
  • Online Processes: Renewing your vehicle registration or your driver’s license? Texas has you covered with online services.​

How to establish residency in Texas

Steps to move your domicile to Texas

1. Plan your stay

  • Arrangement: Whether you're renting, buying, or going the trendy co-living route, get a place with your name on it in Texas
  • Documentation Preparation: Start putting together the ID, bank statements, and any other paperwork you’ll need to show you’re setting down roots.
  • Timeline Planning: Texas wants you around for at least a month before you can say you're a local. Students, you've got a year-long date with Texas before you're official and can get any in-state tuition benefits.

2. Obtain a Texas address

  • Secure a Physical Address: Lock down a place to call your own. Buy a little slice of Texas, or find a rental where you can kick up your boots.
  • Update Your Mailing Address: Switch your mailing address pronto. The sooner you start getting mail with your name and Texas address, the better. It's solid proof for the residency checklist.

3. Gather necessary documentation

  • Proof of Residency: Line up the usual suspects of paperwork: a voter registration card, your car's Texas registration, and proof you're insured to drive in the state.
  • Additional Documentation: Sometimes you've got to show a bit more, like where you work, where you're paying taxes, or where you've been learning. Keep those docs handy too.

4. Department of Public Safety (DPS) visit

Head to the nearest Department of Public Safety office and apply for that Texas driver's license or ID card

5. Register to vote

Show you're all in on Texas decisions by registering to vote. This is an important step to becoming a true Texan.

6. Vehicle registration (if applicable)

If you own a motorcycle, car, or boat, get it decked out with local plates. 

7. File IRS Form 8822

Finally, it is important to update your federal records by filing Form 8822 with the IRS. This form officially notifies them of your change of address, ensuring consistency across your state and federal documentation.

Filing the form in a timely manner is crucial in affirming your new domicile for tax purposes.

8. Update your address with relevant entities

Tell your bank, your job, and anyone else who sends you important mail that you should be reached at your new Texas address.

9. Maintain records

File away every piece of paper that proves you're a Texas resident. You'll want that paper trail neat and tidy.

Comparison with Florida and South Dakota domiciles

Florida vs South Dakota vs Texas Domicile

When it comes to choosing a domicile for tax benefits, Texas, Florida, and South Dakota are often in the spotlight. Here's a side-by-side comparison to give you a clearer picture:

Tax benefits:

State income tax 

All three states roll out the red carpet for your wallet by not dipping into your income. Whether you're a freelancer or running a corporation, you're off the hook for state income tax in Texas, Florida, and South Dakota.

Sales tax

  • Texas starts with a 6.25% state sales tax. But depending on where you shop, local taxes might bump that number up a bit.
  • Florida has a slightly lower state sales tax at 6%, but just like Texas, local areas could tack on extra.
  • South Dakota boasts the lowest state sales tax of the trio at 4.5%, but again, local taxes could increase your checkout total.

Capital gain tax

If you’re playing the long game with your investments, Texas, Florida, and South Dakota won’t ask for more at tax time. Capital gains get the same no-state-tax treatment, with only federal taxes to consider.

Establishing residency:

General consideration

  • Nomad-Friendly States: All three are a hit with roaming types like RVers and globe-trotting workers because they don't require a slice of your income.
  • Common Steps: Whichever state you pick, you'll be looking at similar steps like snagging a local address, getting that state ID or driver's license, and ensuring your mail knows where to find you.

Texas

  • Get a Texas address, apply for a Texas ID, and let the state know you'll vote here
  • If you've got wheels, Texas wants to peek under the hood with a vehicle inspection. Yes, this means driving your car all the way to Texas.
💡
Texas is one of 13 states that mandate annual inspections for cars. That will change in about 18 months now that the Texas Legislature has given final approval to House Bill 3297.

Florida

  • Florida's list looks a lot like Texas'—address, ID, voter registration.
  • Registering your car here might be kinder to your bank account than in South Dakota, and you can skip the vehicle inspection. Instead, all you need is your VIN to be physically inspected by a local police officer in your current county. Considering that this could save you a road trip across the country, it’s well worth it.
Florida Residency information

South Dakota

  • South Dakota keeps the hassle to a minimum—just the address and ID.
  • The fees for vehicle registration are fair, and you won't have to worry about inspections or emissions tests, which means no road trips and no VIN inspections
South Dakota Residency information

FAQs

What are options for proof of residency in Texas?

To provide proof of residency in Texas, individuals must present two printed documents that contain their name and residential address, with one document verifying that they have lived in Texas for at least 30 days. 

Acceptable documents include:
  • Current deed, mortgage, or residential rental/lease agreement.
  • Valid Texas voter registration card.
  • Texas motor vehicle registration or title.
  • Texas concealed handgun license or license to carry.
  • Utility or residential service bill dated within 180 days.
  • Selective Service card.
  • Homeowner’s or renter’s insurance policy.
  • High school, college, or university report card.
  • Preprinted tax forms, financial statements, or government agency documents.
  • Military or Veteran's Administration documents indicating address.
  • Medical bills, hunting/fishing licenses, pay stubs, etc.

How does establishing a domicile in Texas impact my federal and state tax obligations?

Establishing a domicile in Texas can reduce your state tax obligations due to the absence of state income tax, but federal tax obligations remain unchanged.

Are there any benefits in Texas for remote workers or digital nomads in terms of services or infrastructure?

Texas is big on tech and has a welcoming vibe for remote workers. Think co-working spaces and tech meetups galore, plus a business-friendly atmosphere.

What are the implications for my voting rights if I choose Texas as my domicile?

Planting your flag in Texas means you get to vote in Texas. Remember to update your registration and note that you won't be voting back in your old stomping grounds.

How does Texas handle driver's licenses for those not physically present year-round?

Even part-timers can get a Texas driver's license. Just make sure you've got a legit Texas address and keep up with any special rules for renewals.

Can I maintain my Texas domicile if I'm abroad for an extended period?

For sure. Just make your intent to return to Texas clear, keep a local address, and stay on top of any legal and tax stuff. It wouldn't hurt to get some expert advice, either.

How often must I be in Texas to maintain my domicile status?

Well, Texas likes to see some commitment. Try to spend around half the year there, or at least get settled for 30 days. But really, it's about showing Texas is your true home state.

Are there any Texas-specific health insurance considerations for remote workers or digital nomads?

Health insurance can be tricky, so look for plans tailored to folks who might be working from a hammock one day and a coffee shop the next.