How Residency Decides Whether You File a State Tax Return
Where you live and where you earn money decide which states expect a return. State income tax is separate from federal income tax, so your federal and state returns are separate returns. Each state also sets its own filing threshold, which is the income level that triggers a filing requirement.
Your residency status in a state depends on these terms:
- Domicile is your permanent home, the place you plan to return to after time away.
- Resident means you live in the state, usually because it’s your domicile. That state can tax all your income.
- Nonresident means you earn income from a state without living there. That state can tax only the income you earned there.
- Part-year resident means you moved into or out of the state during the year. Part-year residents generally file a part-year return in each state.
Many states have a statutory residency rule, often based on spending more than 183 days in the state and keeping a home there. Rules vary by state, so be sure to check primary sources published directly by state taxing authorities (e.g., the state’s Department of Revenue).
States With No Income Tax
Nine states have no broad-based individual income tax for 2025 and 2026:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
The other 41 states and Washington, D.C., tax income. Two of the nine have exceptions worth knowing.
New Hampshire repealed its 3% Interest and Dividends Tax for tax periods starting on or after Jan. 1, 2025. Returns are still due for 2024 and earlier years, according to the New Hampshire Department of Revenue Administration.
Washington doesn’t tax wages, but it taxes certain long-term capital gains for individuals. Starting with tax year 2025, the rate is 7% on the first $1 million of taxable Washington capital gains. Gains above $1 million are taxed at 9.9%, according to the Washington State Department of Revenue.
Common Scenarios
| Your situation | Where you may need to file |
|---|---|
| You live and work in one state that taxes income. | Your resident state. |
| You live and work in a state with no income tax. | Usually no state income tax return. |
| You live in one state and work in another. | A resident return at home and a nonresident return where you work, unless a reciprocity agreement applies. |
| You moved to a new state during the year. | A part-year resident return in each state. |
| You spent more than 183 days in a state that isn’t your domicile. | The state where you were a nonresident; rules vary by state, so check the state’s official guidance (the state’s Department of Revenue). |
How to Avoid Double Taxation
Filing in two states usually doesn’t mean paying tax twice on the same income. Your resident state generally gives you a credit for tax you paid to another state. However, that credit may not cover the full amount of taxes paid.
Some neighboring states go further with reciprocity agreements. Under these agreements, workers who live in one state and work in the other generally pay income tax on wages only to their home state. For example, Minnesota has reciprocity agreements with Michigan and North Dakota, according to the Minnesota Department of Revenue.
What If You Don’t File a Required State Return?
If your state requires a return, you still need to file it, even after you’ve filed your federal return. Each state sets its own deadlines and rules for late or missing returns, so check with your state’s tax agency.
To find your state’s tax agency, use the IRS list of state government websites.
Sources
- IRS, State Government Websites
- New Hampshire Department of Revenue Administration, Repeal of NH Interest and Dividends Tax Now in Effect
- Washington State Department of Revenue, New Tiered Rates for Washington’s Capital Gains Tax
- Minnesota Department of Revenue, Reciprocity
