This article is for information only and is not tax advice.
Your resident state may tax you on your income because you are a resident of that state. It does not matter where you earned the income. The income can come from Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, or Wyoming. If your resident state has an income tax, it can apply to that income.
Which states do not tax wage income?
The following nine states do not tax wage income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
How does state tax apply in each situation?
The following table shows the result for common situations.
| Your situation | What happens |
|---|---|
| You live in a state with an income tax and earn income in a state without an income tax | Your resident state taxes the income. You file a resident state tax return. |
| You live in a state without an income tax and earn income in a state with an income tax | The state where you earned the income can tax it. You file a nonresident return in that state. Your home state has no income tax. |
| You live and earn income in states without an income tax | You do not file a state income tax return for your wages. |
| You live in one state with an income tax and earn income in another state with an income tax | Both states can tax the income. You file a nonresident return in the work state and a resident return in your home state. |
| You live in a state with a reciprocal agreement with the state where you work | The work state does not tax your wages. You file only in your home state. |
What is a reciprocal agreement between states?
A reciprocal agreement is an agreement between two states with an income tax. Under the agreement, residents of one state do not pay income tax to the other state on wages earned there. They pay income tax only to their home state.
Only some states have these agreements, and each agreement covers specific states. Ask your employer or the state tax office whether an agreement applies to you.
Do I get a credit when two states tax the same income?
Many states give residents a credit for income tax paid to another state on the same income. The credit reduces the resident state tax. A state without an income tax collects no tax, so there is no tax to credit for income that you earned there.
Why does my state return show income from a state without income tax?
A resident state return starts with your total income, no matter where you earned it. The return then applies the rules of your resident state. Some states do not follow the federal tax treaty exemption, so a state can tax income that the federal return exempts.
What should I check in Sprintax Returns if I think my state tax is wrong?
Check the dates and the states in the Living in the US section of Step 6 State taxes. These details decide your residency for each state.
Check the state lines of your Form W-2, including the state and the state wages.
Check that you entered every state where you lived and every state where you earned income.
If the details are correct, Sprintax has calculated your state tax from the rules of each state.