That depends on reciprocal tax agreements. [1] He will have to file in both states, but what he pays will depend on several factors. He will likely get tax credits in California, but I am not a tax attorney or a CPA. Elon could probably give some indication on how much he is saving if he is saving anything at all.
It's even trickier than that. The company I work for is HQ in California, but we have employees based in another state. They pay taxes to that state, not California and there are no reciprocal agreements with that state.
I understand what you are saying, but it really does not conflict with what I am saying. Our employees in that other state are not working on physical things in that state. They ssh to servers in the U.S. and E.U. and do Zoom calls with people in other states and countries.
In my mind, this is exactly what Elon would be doing from Texas. Zoom calls with people in other states and countries. So how are the two things different and why would he be paying CA taxes on his personal income?
The two things aren't different if Musk actually doesn't set foot in California, just like the employees of your company.
I'd imagine the commenter that said he'd still have to pay income tax in California assumed that Musk would still need to be in California, to manage his companies there, and would have to pay California tax on a corresponding proportion of his income.
Even set foot might be ok. Our employees sometimes visit CA for a day or two. That said, we have had employees that were in NY for a month and NY did require them to file. This actually prompted an interesting internal conversation on slack and I learned a lot today.
>State personal income taxes are based on your legal domicile
Not in CA. The determination of your residency status for CA tax purposes is based on much more than just your legal home address. And even if you are classed as a nonresident, you still pay CA taxes on any income earned due to work in CA.
Texas and CA do not have any reciprocal tax agreements.
Source: live in Texas, travel for work a lot all over the country, including many months spent in CA, have had to file many income tax returns and determine residency status with the state of CA for exactly this purpose.
> you still pay CA taxes on any income earned due to work in CA
I do exactly this. I earn income from a CA company, but live elsewhere. But I wouldn't characterize it as "paying".
Paychex withholds my CA taxes, which then get (nearly) fully refunded a week after filing. It's not exactly "paying" - rather, you're giving a zero-interest loan to the State of California with an average maturity of 6-7 months.
That's one situation, but when I said "earned due to work in CA" I meant work that is physically done in CA, not just work for a CA-based company.
For example, let's say I live in Texas and work for a Texas based company at a salary of $100k/yr. I spend most of my time in Texas, but I travel a lot for work and for 12 weeks of the year, I spend Monday through Friday in California.
Since I am a resident of Texas, I pay taxes on all of that $100k to Texas (but since TX has no income tax, it's moot).
However, I spent 12 weeks of that work in California, making me a nonresident worker in California. I owe CA income tax on $100k * (12 weeks spent in CA / 52 total weeks in a year) = ~$23k. If I have enough deductions in CA to offset that, I might end up owing nothing and any paid taxes might all get refunded to me. But if I don't have enough deductions, I might owe CA some tax money.
Thankyou for the clarification. In that case, Elon would need to move his businesses from California to Texas as well. In the mean time, I'm trying to figure out how are non California employees are not paying CA taxes. I suspect that he won't be paying CA taxes on his personal income.
His businesses in California would have to move to Texas to realize the benefits.