Texas has become the preferred domicile for thousands of US expats living abroad who want to eliminate state income tax while maintaining a legal US home base. With zero state income tax, no estate tax, straightforward residency requirements, and no minimum physical presence requirement, Texas offers expats the perfect combination of tax efficiency and flexibility.

This comprehensive guide explains how to establish Texas domicile as an expat, maintain it while living internationally, understand tax implications, and ensure your setup withstands potential audits from your former state.

Why Texas for Expats?

Texas stands out as the top choice for US citizens and green card holders living abroad:

Zero State Income Tax

Texas has no state income tax on any form of personal income, including:

Foreign earned income (even if not excluded via FEIE)
Investment income and capital gains
Retirement account distributions
Rental income from US or foreign properties
Business income from worldwide sources

For expats earning significant income abroad, this eliminates a 3-13% state tax burden that would apply in states like California, New York, or Virginia.

No Estate or Inheritance Tax

Texas levies no state estate tax or inheritance tax, making it favorable for wealth transfer and estate planning—especially important for long-term expats with international assets.

No Minimum Physical Presence Requirement

Unlike some states, Texas doesn't require you to spend any minimum number of days in the state each year. Once domicile is established, you can live abroad indefinitely and remain a Texas resident.

Expat-Friendly Requirements

Texas doesn't penalize expats for living abroad. You can establish and maintain domicile with proper documentation even if you never return to the US for years at a time.

Strong International Banking

Major Texas cities (Houston, Dallas, Austin) have robust international banking infrastructure, making it easier for expats to maintain US bank accounts and financial relationships.

Texas Domicile vs. Residency: What's the Difference?

For tax purposes, these terms are essentially interchangeable, but understanding the distinction is helpful:

Domicile

Domicile is your permanent legal home—the place you intend to return to indefinitely, even if you currently live elsewhere. You can only have one domicile at a time.

For expats: Your domicile is where you maintain your legal ties, file state taxes (if any), and claim as your permanent home—even though you physically live abroad.

Residency

Residency generally refers to where you physically live. As an expat, your physical residence is abroad, but your legal domicile can be Texas.

Key point: Texas uses "domicile" for tax purposes. If Texas is your domicile, you're a Texas resident for tax purposes (paying zero state tax), regardless of where you physically live.

Requirements to Establish Texas Domicile

To establish Texas as your legal domicile while living abroad, you must demonstrate intent to make Texas your permanent home and take specific actions to prove that intent.

Core Legal Requirements

Physical Presence: Visit Texas at least once to establish domicile (can be very brief)
Intent to Stay: Demonstrate genuine intent to make Texas your permanent home
Abandon Prior Domicile: Sever legal ties with your previous state

Documentation You Need

1. Texas Residential Address

You need a physical street address in Texas (not a P.O. Box or commercial mail receiving service). Options for expats:

Own property: Purchase a home or condo (not practical for most expats)
Rent: Long-term lease (expensive if not using the property)
Family address: Use a family member's Texas address with their permission
Residential address service: Use a service like Your Tax Base that provides a legitimate Texas street address with lease documentation

For expats: A residential address service is typically the most cost-effective and compliant solution, providing everything you need for DMV, banks, and legal purposes without maintaining physical property.

2. Texas Driver's License or ID

Obtain a Texas driver's license or state ID. This is the single strongest proof of domicile intent.

Requirements:

Proof of Texas residential address (2 documents: lease + utility bill)
Social Security card or equivalent
Proof of US citizenship or legal presence (passport, birth certificate)
Surrender out-of-state driver's license (if applicable)

Cost: $25-35 depending on license type
Validity: 6 years (renewable by mail for expats)

3. Texas Voter Registration

Important: Cancel voter registration in your former state. You can only be registered in one state at a time.

4. Update Financial Institutions

Change your permanent address to Texas with:

US banks and credit unions
Brokerage and investment accounts
Credit card companies
Retirement accounts (401k, IRA, pensions)
Insurance providers (life, health, auto)

Why it matters: Financial institutions report your address to the IRS and state tax authorities. Consistent Texas address across all accounts strengthens your domicile claim.

5. File IRS Form 8822

Notify the IRS of your address change by filing Form 8822. This updates your address for all federal tax purposes.

6. Vehicle Registration (If Applicable)

If you own a vehicle in the US, register it in Texas. If your vehicle is abroad or in storage, update your records to show Texas as your domicile state.

Step-by-Step: Establishing Texas Domicile as an Expat

Before You Leave the US (If Still Stateside)

If you're planning to move abroad and want Texas domicile, establish it before leaving:

Secure a Texas residential address
Visit Texas to get your driver's license
Register to vote in Texas
Update all financial accounts
Cancel ties with former state

This is the easiest path because you can handle everything in person.

If You're Already Living Abroad

If you're currently an expat and want to establish Texas domicile, you'll need to make a trip to Texas (or do it during a home visit):

Step 1: Secure a Texas Residential Address

Before you can get a driver's license, you need proof of a Texas residential address. For expats, the best options are:

Family address: Free, but requires cooperation and trust
Residential address service: Your Tax Base provides Texas addresses with lease documentation, utility bills, and worldwide mail forwarding

Step 2: Plan a Texas Visit

You must visit Texas in person to:

Get your Texas driver's license (cannot be done remotely)
Optionally: Register to vote (can also be done online later)
Optionally: Open a Texas bank account

Minimum trip length: 1-2 days (though most expats spend 3-5 days)

Step 3: Get Your Texas Driver's License

Visit a Texas Department of Public Safety (DPS) office with:

Proof of identity (passport or birth certificate + photo ID)
Social Security card or documentation
Proof of Texas residential address (lease + utility bill)
Out-of-state license (if applicable—you'll surrender it)

Find the nearest DPS office: Texas DPS Locations

Tip: Make an appointment online to avoid long wait times.

Step 4: Register to Vote

You'll need your Texas address and driver's license number.

Step 5: Update All Financial Accounts

From abroad, systematically update your address:

Banks: Online or by calling customer service
Credit cards: Online account settings
Brokerage accounts: Secure message or call
Insurance: Policy updates online or via agent
Retirement accounts: Online or by mail

Step 6: File IRS Form 8822

Mail Form 8822 to the IRS to update your official address. You can also update it when you file your next federal tax return.

Step 7: Sever Ties with Your Former State

To avoid your former state claiming you as a resident:

Cancel voter registration in old state
Surrender old driver's license to Texas DPS
Update professional licenses to Texas address
Close state-specific accounts (if any)
Sell or rent out property in former state (if owned)
Update "home" location on social media

Step 8: Maintain Your Texas Domicile

Once established, maintain domicile by:

Keeping Texas address active (via mail forwarding if needed)
Using Texas address for all official documents
Filing federal taxes from Texas address
Renewing Texas driver's license every 6 years (can do by mail)
Keeping voter registration active

Tax Implications for Expats with Texas Domicile

State Tax: $0

Texas levies zero state income tax, so as a Texas domiciliary, you owe nothing to Texas regardless of your income level.

Federal Tax Obligations

As a US citizen or green card holder, you must still:

File federal income tax returns annually (IRS Form 1040)
Report worldwide income
Pay federal income tax (subject to exclusions/credits)

Foreign Earned Income Exclusion (FEIE)

If you qualify, you can exclude up to $126,500 (2025) of foreign earned income from federal taxes using the Foreign Earned Income Exclusion.

Requirements:

Physical Presence Test: Be present in a foreign country for 330 days out of any 12-month period, OR
Bona Fide Residence Test: Be a bona fide resident of a foreign country for an entire tax year

Combined benefit: FEIE (up to $126,500 excluded) + Texas domicile (zero state tax) = maximum tax savings.

Foreign Tax Credit

If you pay income tax to your host country, you can claim the Foreign Tax Credit (FTC) to offset federal tax owed on the same income.

Strategy: Many expats use FEIE for earned income up to the limit, then use FTC for any excess or for passive income (dividends, interest, capital gains).

FBAR and FATCA Reporting

If your foreign bank accounts exceed $10,000 at any time during the year, you must file FBAR (FinCEN Form 114).

If your foreign assets exceed certain thresholds ($200k-$600k depending on filing status), you must file FATCA Form 8938 with your tax return.

Your Tax Base partners with expat tax CPAs who specialize in these filings.

Maintaining Texas Domicile While Living Abroad

Once established, maintaining Texas domicile while living internationally is straightforward:

Keep Your Texas Address Active

Use a mail forwarding service to receive mail at your Texas address and have it forwarded to wherever you're living abroad.

Why it matters: You need a consistent mailing address for banks, IRS correspondence, driver's license renewal, and other official documents.

Renew Your Texas Driver's License

Texas licenses are valid for 6 years. You can renew by mail or online if you meet eligibility requirements (typically if your previous renewal was in person).

Details at Texas DPS License Renewal.

File Federal Taxes from Texas Address

Each year, file your federal tax return (Form 1040) showing your Texas address. This reinforces Texas as your domicile.

Expat filing extensions: US citizens abroad automatically get a 2-month extension (to June 15) and can request further extensions to October 15.

Maintain Consistent Address

Use your Texas address consistently on:

IRS tax returns
Bank and brokerage statements
Insurance policies
Professional licenses
Passport renewal applications
Social Security correspondence

Minimize Ties to Former State

Avoid actions that could suggest you maintained domicile elsewhere:

Don't re-register to vote in former state
Don't get a driver's license in another state
Don't maintain property as "primary residence" elsewhere

Common Mistakes Expats Make

Using a Commercial Mail Drop

UPS stores, The UPS Store, or CMRA (commercial mail receiving agencies) addresses are often flagged by DMV and banks. Use a residential address service with a real street address instead.

Not Updating All Financial Accounts

Leaving bank statements showing a California or New York address undermines your Texas domicile claim.

Keeping Voter Registration in Former State

You can only be registered to vote in one state. Former high-tax states check voter rolls during audits.

Not Filing IRS Form 8822

Failing to officially notify the IRS of your address change can result in notices being sent to your old address and missed deadlines.

Spending Long Periods in Former State

If you return to the US and spend 183+ days in a year in your former high-tax state, that state may claim you as a resident for tax purposes, even if you maintain Texas domicile.

Audit Defense: Proving Texas Domicile

High-tax states like California, New York, and Virginia aggressively audit former residents who claim to have left. If challenged, you'll need to prove:

1. Intent to Establish Texas Domicile

Texas driver's license
Texas voter registration
Lease or property documentation in Texas
Consistent use of Texas address on all official documents

2. Severing Former State Ties

Surrendered old driver's license to Texas DPS
Cancelled old state voter registration
Updated all financial accounts to Texas address
Sold or rented out former primary residence

3. Actions Consistent with Texas Domicile

Filed federal tax returns from Texas address
Received mail at Texas address
Listed Texas as "home" state on passport application
Updated professional licenses to Texas

4. Limited Time in Former State

If you visit the US, track your days carefully. Spending 183+ days in a year in a former state can trigger residency obligations there.

Texas vs. Other Expat Domicile States

Expats commonly choose between these zero-tax states:

State	Income Tax	Ease of Setup	Best For
Texas	$0	Easy	Most expats, especially those with Southwest US ties
Florida	$0	Very Easy	Expats with Southeast US ties, retirees
South Dakota	$0	Very Easy	Full-time travelers, RVers
Nevada	$0	Easy	West Coast expats
Washington	$0*	Moderate	Pacific Northwest ties (*7% capital gains tax on high earners)

Why choose Texas:

No capital gains tax (unlike Washington)
Major international airports (DFW, IAH, AUS) for easier US visits
Strong banking and financial infrastructure
No vehicle property tax (unlike Virginia)
Business-friendly for entrepreneurs

Special Considerations for Long-Term Expats

Renewing Documents Remotely

Texas allows license renewal by mail for eligible expats. Passport renewals can be done at US embassies/consulates abroad.

Banking Challenges

Some US banks close accounts for customers living abroad due to FATCA compliance burdens. Maintain accounts with expat-friendly banks like:

Charles Schwab (international ATM fee rebates)
HSBC (global presence)
Citibank (international accounts)

Voting from Abroad

As a Texas voter, you can vote in federal elections from abroad using the Federal Voting Assistance Program.

Medicare and Social Security

Your state of domicile doesn't affect federal Medicare or Social Security benefits. You can receive Social Security payments abroad, though Medicare generally doesn't cover care outside the US.

Tools and Resources for Expats

Your Tax Base Texas Residential Address: Compliant address setup with lease docs and mail forwarding worldwide
Expat Tax Filing Services: CPAs specializing in FEIE, FTC, FBAR, and FATCA
Texas DPS: Driver's license and ID services
VoteTexas.gov: Voter registration
IRS International Taxpayers: FEIE and expat tax resources

Frequently Asked Questions

Can I establish Texas domicile if I've never lived there?

Yes. You only need to visit Texas once (even for a day) to get your driver's license and establish domicile. You don't need prior residency history.

Do I need to return to Texas periodically?

No. Texas has no minimum physical presence requirement. Once domicile is established, you can live abroad indefinitely.

Can I use a family member's address?

Yes, with their permission. Make sure they'll forward your mail and allow you to use their address for official purposes. A professional address service is often more reliable long-term.

What if I don't own a car?

You can get a Texas state ID instead of a driver's license. It serves the same purpose for domicile proof.

Will California or New York audit me?

High-tax states audit former high-income residents. Proper documentation (Texas license, voter registration, updated addresses, severed ties) is your defense.

How do I renew my license from abroad?

Texas allows mail or online renewal for eligible applicants. Check Texas DPS renewal eligibility.

Can I have dual residency?

For tax purposes, you can only have one legal domicile. If you claim Texas domicile, you must abandon domicile in other states.

Final Thoughts

Establishing Texas domicile as an expat is one of the smartest tax moves for US citizens living abroad. Combined with the Foreign Earned Income Exclusion and Foreign Tax Credit, you can significantly reduce or eliminate both state and federal tax burdens.

Texas domicile is ideal for expats who:

Want zero state income tax
Live abroad long-term or indefinitely
Don't plan to spend significant time in the US each year
Want a stable, audit-resistant US domicile
Need a reliable address for banking and legal purposes

Ready to establish Texas domicile? Your Tax Base makes it simple with Texas residential addresses, lease documentation, and mail forwarding to 190+ countries. Get started today or contact us with questions about your situation.

How to Establish Texas Domicile as an Expat