Destination guide

Leaving Australia for the US?
Here's what your move is actually worth.

Defensible exit planning for Australian high earners relocating to the US. No vague promises — just the numbers, the rules, and the evidence that holds up.

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AU-US DTA (comprehensive) · US expat tax regime (FEIE/FTC) · 10–37% federal income tax · EB-1/EB-2/H-1B pathways
The numbers

What leaving for the US actually costs — and saves

Every calculation below uses the same assumptions the ExitProof calculator applies when you select "USA" as your destination. These reflect current ATO rules (ITAA36 s6(1), TR 2023/1) and IRS federal income tax law as of Tax Year 2024-25. Note: the US has the highest federal income tax rates of all exit destinations, but US expat tax provisions and the AU-US DTA can significantly reduce effective burden.

Key assumptions
AU personal income tax37% / 45% / 47% marginal (2024-25)
US federal income tax10–37% bracket rates; 0% on first ~$14,600 individual (2024)
US state income tax0–13.85% depending on state (NY 10.9%, CA 13.3%, TX/FL/WA 0%)
AU-US DTAForeign Tax Credit mechanism prevents double taxation
AU CGT event at departureITAA97 s855-1 — accrued gains crystallise at cessation of residency
US CGT for non-residents0% on non-US assets (no estate tax on non-US assets below threshold)
Income Tier 1
Senior manager, single, $450k in ETFs/shares, renting in Melbourne, moving to New York
Stay in Australia
5-year cumulative tax paid$387,500
10-year cumulative tax paid$847,500
Leave for US (year 1, NY)
5-year cumulative tax paid~$220,000*
10-year cumulative tax paid~$490,000*
Leave vs. stay, 10-year +$357,500

* On ~USD 300k (~$AUD 450k) in NY: federal effective rate ~24–27% (~$72–81k), NY state 10.9% (~$32.7k), NYC local 3.876% (~$11.6k) = combined ~38–40% ($115–120k). FEIE (~$126,500/yr) can reduce US taxable income if eligible. Exit CGT on $450k portfolio at 7% growth: ~$38k. US state tax is a major cost — no state tax states (TX/FL/WA) significantly improve the picture.

Income Tier 2
Executive, two kids, $800k portfolio, apartment rented out in Sydney, moving to California
Stay in Australia
5-year cumulative tax paid~$830,000
10-year cumulative tax paid~$1,820,000
Leave for US (year 1, CA)
5-year cumulative tax paid~$530,000*
10-year cumulative tax paid~$1,165,000*
Leave vs. stay, 10-year +$655,000

* On ~USD 400k (~$AUD 600k) in CA: federal ~$115k (28–29%), CA state ~$62k (13.3%), FICA ~$15.3k = combined ~$192–198k (32–33%). CA has the highest state income tax in the US at 13.3% on income above $1M. Austin TX or Miami FL would reduce combined rate by ~$50–60k/yr. Exit CGT on $800k portfolio: ~$68k.

Income Tier 3
Founder/exec, $2M+ investable assets, AU property portfolio, moving to New York
Stay in Australia
5-year cumulative tax paid~$1,310,000
10-year cumulative tax paid~$2,870,000
Leave for US (year 1, NY)
5-year cumulative tax paid~$760,000*
10-year cumulative tax paid~$1,670,000*
Leave vs. stay, 10-year +$1,200,000

* On ~USD 700k (~$AUD 1.05M) in NY: federal ~$205–230k (37% bracket), NY state ~$81k (10.9%), NYC local ~$27k (3.876%), FICA cap applies = combined ~$313–338k (30–32%). FEIE reduces US taxable income if eligible (~$126,500/yr). Exit CGT on $2M portfolio: ~$168k. US exit case improves significantly in no-state-tax states.

All figures are indicative. US state income tax is a critical variable — moving to TX, FL, or WA improves the delta materially vs NY or CA. Run your exact numbers →
US residency mechanics

How US tax residency actually works

The Substantial Presence Test (SPT) — how IRS determines residency

The IRS uses the Substantial Presence Test (SPT) to determine if a foreign national is a US tax resident. The test uses a formula based on days physically present in the US over a rolling 3-year period. This is mechanically similar to Australia's 183-day test but more complex.

SPT Component Formula / Rule Relevance for Australian high earners
Full count days All days physically present in the current year Count every day — especially if you have a green card or spend significant time in the US
1/3 count days Days from the prior year × 1/3 Second preceding year days × 1/6 also applies if needed to meet the threshold
183-day threshold Sum of full + fractional days ≥ 183 = US tax resident If you work full-time in the US under a visa, you'll typically exceed this
Closer connection exception Can claim non-resident if you've been in US <183 days and have closer ties to another country Only available if you don't hold a green card — not available for green card holders

If you hold a US green card (Lawful Permanent Resident status), you are a US tax resident from the day you receive it — regardless of days in the US. This is a critical difference from visa-based residency. Reference: IRS — Substantial Presence Test

US income tax — what you'll actually pay

Federal income tax is progressive — 10–37%

2024 federal brackets for single filers: 10% on first $11,600, 12% ($11,600–$47,150), 22% ($47,150–$100,525), 24% ($100,525–$191,950), 32% ($191,950–$243,725), 35% ($243,725–$609,350), 37% above $609,350. At $300k USD income, your federal rate is in the 32–35% bracket. Long-term capital gains are taxed separately: 0% (0–$47,025), 15% ($47,025–$518,900), 20% above $518,900.

State income tax — the wildcard

State income tax varies enormously by state. New York (10.9%), California (13.3%), and New Jersey (10.9%) are the highest. Texas, Florida, Washington, Nevada, and South Dakota have zero state income tax. Your city of residence may also add a local tax (NYC adds 3.876% on top of NY state). Choosing a no-income-tax state materially improves your after-tax position — Miami or Austin vs New York or San Francisco can be worth $50–80k AUD/year at high incomes.

Foreign Earned Income Exclusion (FEIE) — your expat tax benefit

FEIE: exclude up to $126,500 (2024) of foreign earnings from US tax

The FEIE allows qualifying US expats to exclude foreign employment or self-employment income from US federal income tax, up to the annual cap ($126,500 for 2024, subject to inflation adjustment annually). To qualify, you must meet either the Bona Fide Residence Test (living in a foreign country for a full tax year) or the Physical Presence Test (330 full days in a foreign country in a 12-month period). Note: the FEIE excludes income from US taxation — but also means you can't take a deduction for foreign taxes paid on that income. Reference: IRS — FEIE

US visa pathways for Australian high earners

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O-1A Visa (Extraordinary Ability)
For individuals with extraordinary ability in science, art, education, business, or athletics. No annual limit. Requires evidence of national/international recognition (awards, publications, media coverage, high salary). Self-petition possible. EB-1A green card pathway is the permanent resident equivalent.
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H-1B Visa (Specialty Occupation)
For professionals in specialty occupations requiring bachelor's degree+. Subject to annual cap (65,000 + 20,000 for US master's holders). Requires employer sponsorship. Registration lottery run each March. Very competitive — Australian candidates with tech/finance background compete well.
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EB-2 / EB-1C (Green Card)
Employment-based permanent resident (green card) pathways. EB-2 requires advanced degree or exceptional ability + employer sponsorship + PERM labor certification. EB-1C (L-1A managers) offers faster processing. EB-2 National Interest Waiver (NIW) allows self-petition for individuals whose work benefits the US. Reference: DOS — EB-1
Why it matters for your exit plan: Your visa status and the IRS Substantial Presence Test together determine your US tax residency. If you hold a green card, you're a US tax resident from day one — no exceptions. For visa holders, track your days carefully. The AU-US DTA provides a foreign tax credit mechanism that prevents double taxation on income taxed in both countries, but the mechanics are complex — you'll want a US expat tax specialist (not a general accountant) for your first year.

Reference: USCIS — Working in the US, IRS Publication 54

ATO residency tests

The 4 ATO statutory tests applied to a US move

Under s6(1) ITAA36, you are an Australian tax resident if you satisfy any one of four tests. You must fail all four to be a genuine non-resident. The US is the most distant of all exit destinations — physical distance is actually your ally here, but family ties and AU property can override it.

Test What it asks US-mover risk
1. Ordinary concepts Does your presence in Australia feel "usual and settled" — or temporary and casual? MEDIUM — physical distance (15+ hour flights) reduces habitual return; but AU family, property, and superannuation can still create strong ties
2. Domicile Is your domicile in Australia? (Presumed yes unless you establish a permanent place of abode overseas AND intend to stay) MEDIUM — establishing domicile in the US requires demonstrating permanent, not temporary, relocation (green card or extended visa)
3. 183-day test Have you been physically present in Australia for 183+ days in the income year? LOW — working full-time in New York/San Francisco means you'll likely spend far fewer than 183 days in AU
4. Superannuation test Does your employer pay compulsory superannuation contributions in Australia? LOW — US employer pays into US retirement plans; AU super contributions stop when payroll moves
Physical distance is your ally. The ATO's ordinary concepts test looks at the "matrix of connections" — and physical distance meaningfully reduces your AU associations over time. Unlike Singapore (7 hours away, easy to visit), the US West Coast is 15–16 hours from Sydney — school holidays, casual visits, and property management are all logistically harder. Build your US evidence file from the day you land: tenancy, bank accounts, US driver's licence, and social connections. Every year of settled US presence reduces your AU residency risk.
Common mistakes

What Melbourne-siders get wrong about a US move

01
Underestimating state income tax
Federal income tax is only part of the picture. New York (10.9% state + 3.876% NYC local) and California (13.3%) add significant additional burden. Many Australians relocating to New York or San Francisco are shocked when their combined federal + state tax exceeds 45–50%. Choosing a no-income-tax state (Texas, Florida, Washington) or a lower-tax state (Nevada, Arizona) materially changes the economics of the move.
Mitigation: Before accepting a US role, model your after-tax income in the specific city you'll be living in. The difference between New York and Austin, Texas at $300k salary is approximately $50–60k AUD per year after tax. Factor this into your salary negotiation and location decision.
02
Not engaging a US expat tax specialist from day one
US tax law is exceptionally complex, and the US is one of only two countries (along with Eritrea) that taxes its citizens on worldwide income regardless of where they live. As an Australian tax resident who becomes a US tax resident, you will be taxed by both countries on the same income. The AU-US DTA foreign tax credit (FTC) mechanism prevents double taxation — but it's not automatic and it's easy to make mistakes that cost you money.
Mitigation: Engage a US expat tax specialist (Enrolled Agent or CPA with expat experience) for your first US tax year. The cost (~$800–1,500 USD) is trivial against the potential errors. Also understand that the IRS requires FBAR (Foreign Bank Account Reports) if you have more than $10,000 USD in foreign accounts at any point during the year — this is a separate filing from your tax return with significant penalties.
03
Returning to Australia too frequently
Unlike Singapore (7 hours away), the US is far enough that returning is expensive and time-consuming. But if you're visiting family three or four times a year for extended periods (school holidays, Christmas, etc.), the cumulative days can add up — and family ties are exactly what the ATO weighs heavily under the ordinary concepts test. 30 days here, 6 weeks there = 60+ days per year, which is over the ATO's provisional visitor threshold.
Mitigation: Track every day in Australia. Aim for under 45 days per income year. Use ExitProof's /maintain tracker. If you need to return for extended family, keep visits shorter and document the purpose. The further you are from Australia, the harder it is to maintain the daily associations that signal residency.
04
Confusing green card status with tax residency
If you receive a US green card (Lawful Permanent Resident status), you are a US tax resident from the day you receive it — not after 183 days. The green card "tests" you've satisfied the SPT and you are filing as a US resident from year one. This also means you're subject to worldwide income tax under US rules, and your Australian superannuation, property, and other assets may need to be reported on a US tax return (Form 5471, FBAR, etc.).
Mitigation: If you're pursuing a green card, understand that the US exit from Australian tax residency is the same regardless — you still need to build the ordinary concepts evidence file and demonstrate you've ceased Australian residency. The green card does not affect the ATO test, only the IRS test.
05
Not accounting for US healthcare costs
Unlike Australia (Medicare) or the UK (NHS), healthcare in the US is expensive. If your employer doesn't provide health insurance (common for startups), you'll be buying individual coverage on the ACA marketplace — potentially $500–1,000 USD/month for a family. Employer-provided health insurance typically costs the employee $100–300/month in contributions for good family coverage, with the employer covering the remainder.
The DTA advantage

Australia's DTA with the US — what it actually does

The AU-US DTA is comprehensive and long-standing (1982). Its primary function for an Australian relocating to the US is the foreign tax credit (FTC) mechanism — preventing double taxation by allowing you to credit taxes paid to one country against tax liability in the other.

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Treaty tie-breaker
Article 4 of the AU-US DTA provides a tie-breaker for dual residents. The tests are: (1) country where you have a permanent home, (2) centre of vital interests, and (3) habitual abode. If you're genuinely living in New York with your family, this reliably allocates your treaty residency to the US.
Reference: ATO — AU-US DTA
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Foreign Tax Credit mechanism
If you pay US income tax on your salary, you can generally claim a credit against your Australian tax liability on the same income. This prevents paying tax twice on the same dollar. The calculation is complex and subject to limitations — the FTC is calculated separately for different types of income (foreign income vs foreign tax paid), and there are caps. This is why a US expat tax specialist is worth the cost.
The practical implication: The AU-US DTA is your structural protection against double taxation. But the US taxes its citizens and residents on worldwide income — meaning even if your Australian income is taxed in Australia, you may still need to report it on a US tax return (but claim the FTC to offset double tax). This creates a significant compliance burden. The DTA protects you from double taxation, not from the compliance obligation to file in both countries.
Evidence checklist

What a counsel-ready US evidence file looks like

Each item addresses one of the six ordinary concepts factors (TR 2023/1 para 20). For the US specifically, given the physical distance and the complexity of dual tax residency, your evidence file must be thorough and maintained annually. The AU-US DTA is your formal backstop; your evidence file is your primary defence.

Identity & Immigration Status
  • ☐ US visa (O-1, H-1B, L-1, etc.) — I-797 approval notice
  • ☐ I-94 arrival/departure record (travel history)
  • ☐ US Social Security Number (SSN) and card
  • ☐ US passport entry/exit stamps (full passport history from departure date)
  • ☐ Copy of departure travel booking from Australia
Accommodation (strongest ordinary concepts evidence)
  • ☐ US lease or mortgage documents (12+ months, in your name)
  • ☐ US utility bills (electricity, gas, internet) in your name
  • ☐ US homeowners insurance or renters insurance policy
Financial (economic centre of life)
  • ☐ US bank account statements (Chase, Bank of America, etc. — 3+ years)
  • ☐ US payslips / W-2 from US employer
  • ☐ US credit card statements showing regular local expenditure
  • ☐ US investment account statements (Fidelity, Schwab, etc.)
  • ☐ Evidence of AU account reduction in activity (optional but helpful)
  • ☐ FBAR filing confirmation if AU accounts exceed $10k
Employment & Business
  • ☐ US employment contract (signed, US entity, dated)
  • ☐ I-797 Notice of Action (USCIS approval)
  • ☐ W-4 withholding certificate
  • ☐ Business registration in US if applicable (IRS EIN)
Family & Social Ties
  • ☐ Children's school enrolment in US (public or private school)
  • ☐ US health insurance documentation (employer plan or ACA marketplace)
  • ☐ US driver's licence (state-specific, updated annually)
  • ☐ Social memberships (gyms, clubs, professional associations in US)
  • ☐ US mobile number (active, plan in your name)
Day-Count Tracking
  • ☐ Annual day-count log: dates in/out of Australia and US
  • ☐ Passport scans of all entry/exit stamps (AU and US)
  • ☐ Flight itineraries for all travel
  • ☐ Hotel receipts or proof of third-country travel (not AU or US)
See a sample evidence file → Evidence file export included with Stage 2 Exit Planning ($197/mo)
Compare destinations

US vs. Singapore vs. staying in Sydney

Headline numbers. State income tax makes the US comparison highly variable by city. Run the full comparison →

US (NY/CA) US (TX/FL/WA) Singapore Stay in Sydney
Federal income tax 24–37% 24–37% 0% N/A
State/city income tax 10.9–13.3% + 3.9% 0% 0% N/A
AU CGT for non-residents 0% (shares post-departure) 0% (shares post-departure) 0% (shares post-departure) N/A
DTA with Australia Yes (FTC mechanism) Yes (FTC mechanism) Yes (comprehensive) N/A
Evidence burden Medium (physical distance helps) Medium Medium N/A
Healthcare Employer + ACA (~$200–500/mo) Employer + ACA (~$200–500/mo) CPF + excellent public (low cost) Medicare 2% levy
10yr leave-vs-stay delta (~$450k earner) ~+$357k ~+$460k ~+$737k Baseline

US delta is highly sensitive to state choice. Singapore's 0% income tax and lower cost of living make it the strongest pure tax exit for Australians at this income level. US advantages: world-class cities, tech/finance career opportunities, pathway to green card. Run your personalised comparison →

Run your numbers →
FAQ

Common questions about moving to the US

Does the US tax Australian expats on their worldwide income?
Yes — the US is one of only two countries in the world (along with Eritrea) that taxes its citizens and residents on worldwide income, regardless of where they live. As a US tax resident, you must report your global income to the IRS — including Australian bank accounts, rental income, and investment income. The AU-US DTA Foreign Tax Credit mechanism prevents double taxation by allowing you to credit Australian taxes paid against your US tax liability on the same income, but the filing obligation exists regardless.
What is the US Substantial Presence Test and how does it affect me?
The SPT is the IRS's mechanical test for determining US tax residency for non-citizens. It counts days present in the US over a rolling 3-year period: full count of current year days + 1/3 of prior year days + 1/6 of second prior year days. If the total equals 183 or more, you are a US tax resident. If you're working in the US on a visa, you'll typically trigger this quickly. Note: green card holders are US tax residents from the day they receive the card, regardless of the SPT. Reference: IRS — SPT
What is FBAR and do I need to file it as an Australian with US bank accounts?
FBAR (Report of Foreign Bank and Financial Accounts, FinCEN Form 114) must be filed if you have more than $10,000 USD in aggregate across all foreign bank accounts at any point during the calendar year. As an Australian who moves to the US, if you maintain your Australian bank accounts, this threshold is likely to be triggered. Penalties for non-compliance are severe: up to $100,000 per violation or 50% of account balance, whichever is greater, for willful violations. Reference: FinCEN — FBAR
Can the ATO challenge my Australian residency if I have a US green card?
Yes — a green card does not determine Australian tax residency. The ATO applies ITAA36 s6(1) domestic law and will assess whether you have ceased Australian residency using the ordinary concepts test. Your green card demonstrates you are a US tax resident under IRS rules — but you can be both a US tax resident and an Australian tax resident simultaneously under each country's domestic law. The AU-US DTA tie-breaker (Article 4) will resolve this, but only if your ordinary concepts evidence demonstrates genuine relocation away from Australia. Reference: TR 2023/1
Which US cities offer the best after-tax income for Australian high earners?
No-state-income-tax states: Texas (Austin, Houston, Dallas), Florida (Miami, Tampa), Washington (Seattle), Nevada (Las Vegas), and South Dakota offer the best after-tax outcomes for high earners. Austin, Texas has become a major tech hub and attracts many Australians in technology and finance. New York and San Francisco offer the highest salaries but face state income tax of 10–13% — the net after state tax depends on your specific salary level and whether your employer offers geographic salary adjustments.
What happens to my Australian property if I move to the US?
Australian property is not automatically problematic for US tax residency. However, if you are a US tax resident and also have Australian rental income, you must report it on your US tax return (Form 1040, Schedule E) and pay US tax on it (offset by FTC for Australian tax paid). The 15% Foreign Resident Capital Gains Withholding (FRCGW) applies to sales of Australian real property by non-residents from 1 January 2025. Consult a cross-border tax specialist for your specific situation. Reference: ATO FRCGW rules
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