How to choose a domicile state for taxes, voting, and insurance

Choosing a domicile state affects your taxes, voting rights, insurance, and legal residency. Whether you’re a full-time RVer, remote worker, or simply looking to reduce state income taxes, selecting the right domicile state can save you thousands each year. I’ll guide you through how domicile works, compare the best states, and walk you through the steps to establish it legally.

On a side note, you’ll want to consider what you’ll do with your mail. Read, “Managing healthcare and prescriptions while full-time RVing” for more info.

Why people change their domicile state

People change domicile for several common reasons:

• To avoid or reduce state income tax
• To lower vehicle registration and insurance costs
• To establish voting residency in a state with preferred policies
• To take advantage of estate or inheritance tax rules
• To protect assets through favorable legal protections

The most popular states for this are South Dakota, Florida, Texas, Nevada, Wyoming, Alaska, Tennessee, and Washington.

Key factors to consider when choosing a domicile state

Choosing a domicile state is about more than just avoiding income tax. States look at a combination of financial, legal, and behavioral factors when determining whether you are truly domiciled there. The following considerations are especially important for full-time RVers, remote workers, and people who split time between multiple states.

State income tax

State income tax is often the primary reason people change their domicile. States with no personal income tax can significantly reduce your annual tax burden, especially if you earn income from wages, business activity, investments, or retirement distributions.

However, it’s important to consider how your former state defines residency. Some high-tax states aggressively challenge domicile changes if you continue to spend significant time there or maintain strong ties. Simply declaring a new domicile is not enough—you must also take concrete steps that demonstrate intent to leave your previous state.

States with no personal income tax include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Property taxes and cost of living

While avoiding income tax is attractive, some no-income-tax states make up the difference through higher property taxes, sales taxes, or overall living costs. If you plan to own property in your domicile state, property tax rates can have a major impact on long-term affordability.

Even if you don’t own property, the cost of living matters for insurance premiums, healthcare costs, and everyday expenses. A state with no income tax but high housing or insurance costs may not deliver the savings you expect.

Balancing taxes with the total cost of living helps ensure your domicile choice makes financial sense beyond just tax rates.

Vehicle registration and insurance

Vehicle registration rules are especially important for RVers and people with multiple vehicles. Some states are known for being non-resident-friendly and allow vehicle registration with minimal physical presence or documentation.

Registration fees, vehicle taxes, and emissions requirements vary widely by state. Insurance premiums can also differ significantly depending on location, claims history, and population density.

States like South Dakota and Montana are popular because they offer relatively low registration fees and simplified processes. Always confirm that your insurance carrier accepts your chosen domicile state, as mismatches between registration, licensing, and insurance can raise red flags.

Estate and inheritance taxes

For individuals with significant assets, estate and inheritance taxes can play a major role in choosing a domicile state. Some states impose estate taxes, inheritance taxes, or both, while others have none.

If estate planning is a priority, it’s important to review how your domicile state treats retirement accounts, trusts, and property held in other states. Domicile can determine which state has the authority to tax your estate, regardless of where assets are physically located.

Consulting an estate planning attorney or tax professional is strongly recommended when this factor is significant.

Voting rights and/or ease of voting

Your domicile state determines where you are legally eligible to vote. Registering to vote is one of the strongest indicators of domicile and is often cited in legal disputes over residency.

Some states make absentee or mail-in voting easier than others, which can be an important consideration if you travel frequently or live part-time in other states. Once you establish domicile and register to vote in a new state, you generally must stop voting in your previous state.

Voting behavior should always align with your declared domicile to avoid legal complications.

Driver’s license and ID requirements

Obtaining a driver’s license in your new domicile state is a key step in establishing residency. Most states require you to apply for a new license within 30 to 90 days of establishing domicile, though enforcement varies.

The documentation required can differ significantly by state and may include proof of address, Social Security verification, and prior license surrender. Some states require an in-person visit, while others allow limited remote services.

Your driver’s license address should match your voter registration, vehicle registration, and insurance records to present a consistent domicile profile. Keeping your identification and legal paperwork organized and safe is especially important when establishing domicile.

Proximity and practicality

Practical considerations often determine whether a domicile state is sustainable long-term. Some states require in-person visits for licensing, vehicle registration, or legal matters, making proximity important.

If you anticipate needing to return periodically—for court matters, renewals, or healthcare—choosing a state that is reasonably accessible can reduce stress and travel costs. Weather, healthcare availability, and population density may also affect how practical a state is for your lifestyle.

A domicile state should fit not only your financial goals but also your day-to-day realities.

Comparison of popular no-income-tax states

Steps to establish domicile in a new state

1. Physically move – Spend time in the state and show intent to make it your permanent home.
2. Update your address – Change your address on bank accounts, credit cards, and mail forwarding.
3. Get a driver’s license – Most states require this within 30–90 days.
4. Register to vote – This is a strong indicator of domicile.
5. Register your vehicle – If applicable, register in the new state.
6. File taxes as a resident – File a resident state tax return (or no return if there’s no income tax).
7. Update insurance policies – Home, auto, and health insurance should reflect the new domicile.

My own choice: Why I chose South Dakota

I decided on South Dakota because it was the closest no-income-tax state to where I live. It has no personal income tax, no estate tax, low property taxes, and a straightforward process for vehicle registration, even if you don’t live there full-time. The state is also known for being very domicile-friendly, with minimal hassles for people who want to establish residency without moving their entire life.

Choosing a domicile state requires balancing tax benefits, legal requirements, and personal convenience. For many people—especially RVers and remote workers—states like South Dakota, Florida, and Texas offer the best combination of no income tax and easy residency rules. The right choice depends on your priorities, lifestyle, and long-term plans.

Faq: Frequently asked questions