Sometimes, for part of the price. Gain on your personal goodwill generally follows your residence at the time of sale, so a real, completed move before closing can shift that piece. But California sources installment payments back to California if you were a resident when you sold, and New York treats a 338(h)(10) or asset sale of a New York practice as New York-source income regardless of where you live. Pay for services you perform in the old state after the sale is taxed there too.
" - q: "Which states have the strictest corporate practice of medicine rules?" a: "California, New York, and Texas are the ones most often described as strict; a management services organization owned by private equity contracts with a physician-owned professional entity rather than owning the practice. Florida has no corporate practice of medicine doctrine, but its Health Care Clinic Act licensing rules create a different trap in an MSO deal.
" - q: "Which states require notice before a private equity deal closes?" a: "Fourteen states had health care transaction notice laws in force as of mid-2026, including California (90 days before closing, with a 25-physician threshold for physician groups) and New York (30 days, with a $25 million de minimis exemption). Texas and Florida have no general notice law, though Florida requires a change-of-ownership filing for licensed clinics at least 60 days before closing.
" - q: "My state is not listed. Does the site still apply?" a: "Yes. The federal tax pages and the deal pages apply everywhere. The state pages exist because California and New York have unusual reach-back rules and because Texas and Florida are where sellers most often move. If you practice in another state, ask us; we can usually tell you in one conversation whether your state has a quirk that matters.
" llms_summary: "Hub page for four state guides on the tax treatment of a physician's private equity practice sale. California (13.3% top rate, 18 CCR 17952 sourcing including installment trailing, SB 351 and AB 1415 effective 2026, OHCA 90-day notice), New York (10.9% top rate plus NYC 3.876%, Tax Law 632(a)(2) sourcing of 338(h)(10) and asset sales, PHL Article 45-A 30-day notice, $7.35M estate exemption cliff), Texas (no income tax, franchise tax, strict CPOM, SB 1318 noncompete limits), and Florida (no income tax, Health Care Clinic Act licensing, CHOICE Act excludes physicians). Explains why moving before a sale works only partly and why moving in the year of sale is the highest audit risk pattern." ---Up to 13.3%
Ordinary rates on capital gains, installment payments that follow you out of state, SB 351 and AB 1415 in force since January 2026, and OHCA's 90-day notice.
Up to 14.776% in NYC
A 338(h)(10) or asset sale of a New York practice is New York income even after you move. A $7.35 million estate tax cliff. A 30-day transaction notice.
0% income tax
No income tax, but a franchise tax that a one-time asset sale can trip, strict corporate practice rules, and new 2025 limits on physician non-competes.
0% income tax
No income or estate tax and no corporate practice doctrine, but a clinic license exemption that an MSO deal can void. The most common destination for New York sellers.
| Issue | California | New York | Texas | Florida |
|---|---|---|---|---|
| Top rate on the gain | 13.3% | 10.9% state; NYC residents add 3.876% | None | None |
| Capital gains rate | Same as ordinary | Same as ordinary | n/a | n/a |
| Nonresident seller, goodwill gain | Sourced to residence at time of sale unless CA business situs; installment payments trail back | 338(h)(10) and asset sales are NY-source under Tax Law 632(a)(2) | n/a | n/a |
| Residency test | Closest connections; presumption at 9 months | Domicile, or 183 days plus a permanent place of abode for more than 10 months | Destination state | Destination state; Declaration of Domicile |
| Pass-through entity tax election | 9.3%, extended through 2030 | Yes; election due March 15 | n/a | n/a |
| QSBS conformity | No | Yes (decoupling bill withdrawn in 2026) | n/a | n/a |
| Corporate practice of medicine | Strict; SB 351 limits PE interference | Strict | Strict, with statutory exceptions | None, but clinic licensing applies |
| Transaction notice | OHCA, 90 days, $25M and 25-physician thresholds | DOH, 30 days, $25M de minimis | None | Clinic change of ownership, 60 days |
| Physician non-competes | Void in management contracts (SB 351); sale-of-business covenants valid | Enforceable; ban bill pending | Capped at 1 year, 5 miles, one year's salary buyout (SB 1318) | Enforceable under 542.335 |
| Estate tax | None | Yes; $7.35M exemption with a cliff | None | None |
Any part of the deal that pays you for work, whether a transition agreement, consulting, or the employment agreement itself, is taxed by the state where you do the work. A physician who moves to Florida but keeps practicing three days a week in Manhattan under the new employment agreement owes New York tax on that pay. The move only helps the pieces that are truly investment gain, and only if it is complete before the sale. Read how a practice sale is taxed for the federal side, and personal goodwill for the piece of the price most likely to follow you.