State Income Tax Overview
Understand state residency, working across state lines, and what changes for your taxes when you move.
TL;DR
- Pay full state tax where you are a
residenton all your income. - Claim a
residentCreditwhen another state also taxes your wages. - File a
reciprocityform so neighbor-state employers withhold for home.
No-Tax States, With Catches
The Nine StatesThese states do not tax wages and salaries.
AK FL NV NH SD TN TX WA WYWashingtonNo wage tax, but it taxes large long-term capital gains.
Gains over ~$270,000 taxed at 7%+New HampshireIts last tax on interest and dividends ended in 2025.
Now no tax on wages or investmentsOther TaxesThese states often rely more on sales and property taxes.
Low income tax != low total taxResidency Rules
DomicileYour one permanent home, where you intend to stay or return.
Only one domicile at a timeStatutory ResidentA home in the state plus enough days there can count too.
Home + 183 days = residentPart-Year ResidentIn a moving year, each state taxes its share of income.
Split income by move dateNonresidentA state taxes only the income you earn inside it.
Work there, don't live thereWorking Across State Lines
Work-State ReturnThe state where you work taxes wages earned there.
Nonresident return in work stateResident CreditYour home state credits tax paid to the work state.
Home tax - credit = what you oweReciprocitySome neighbor states tax wages only in your home state.
e.g. PA-NJ, MD-VA, OH-IN, WI-ILRemote WorkA few states tax remote staff of employers based there.
Check your employer's state rulesMoving States
Cut Old TiesChange your license, voter registration, and main address.
License + vote + address = movedKeep a Day LogRecord where you spend each day in the moving year.
Calendar or app, kept all yearUpdate WithholdingGive your employer the new state's withholding form.
New state = new state formFile Two Part-Year ReturnsReport income earned before and after the move to each state.
Jan-Jun old state, Jul-Dec newTips
- Give your employer the
exemptionCertificatefor a reciprocity state so it withholds for your home state and you skip a second return. - Keep a simple
dayLogin the year you move, since states use days spent there to settle residency questions.
Warnings
- Moving to a no-income-tax state does not end your old state's claim until you cut real ties like your
driversLicenseand voter registration. - Working remotely can still create tax in your employer's state; a few states tax remote workers under a
convenienceRule.
In Practice
See how the resident credit keeps the same wages from being fully taxed twice.
You earn $80,000, live in a state with a flat 5% tax, and commute to a job in a state with a flat 4% tax (kept simple, with no state deductions).
- Work state tax: $80,000 x 4% = $3,200 on a nonresident return.
- Home state tax before credit: $80,000 x 5% = $4,000.
- Resident credit: subtract the $3,200 paid, so $4,000 - $3,200 = $800.
- Total state tax: $3,200 + $800 = $4,000, the same as living and working at home.
You pay $4,000 in state tax in total, not $7,200.
With the resident credit, you generally pay the higher of the two states' rates, not both.
FAQ
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not tax wages. Washington does tax large long-term capital gains, and New Hampshire fully ended its tax on interest and dividends in 2025. You still owe federal income tax in every state.
Your domicile is your permanent home, the place you intend to return to, and you only have one. Many states also treat you as a statutory resident if you keep a home there and spend more than 183 days in the state. Either one can make you owe resident tax on all your income.
Usually yes. You file a nonresident return in the state where you work and a resident return in your home state. Your home state then gives you a credit for tax paid to the work state, so the same income is not fully taxed twice.
Some neighboring states agree to tax only their own residents on wages. If you live in one and work in the other, you pay tax only to your home state. You must give your employer the right exemption form, or it will withhold for the work state and you will need to file for a refund.