Key factors: Where you live and where you earn
Your resident state can tax all of your income, no matter where you earned it. A state where you’re a nonresident can only tax the income you earned from sources inside that state. There are nine states that currently don’t have a state individual income tax:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
The 183-day rule and statutory residency
If you are physically present 183 days or more in a state during the year, that state may treat you as a statutory resident—taxing your entire income even if your permanent home (your domicile) is elsewhere. States like New York and California are known for strictly enforcing this rule for those who claim to have moved to a different state.
Common scenarios and what state returns you would file
| Situation | What you likely owe |
|---|---|
| Live and work in the same state | Resident return |
| Live in one state, work in another | Resident return and nonresident return |
| Moved states during the year | Part-year return in both states |
| Fully remote for an out-of-state employer | Depends on employer’s state rules—some tax remote workers |
Avoiding double taxation
Your resident state typically gives you a credit for taxes paid to another state, so you’re only paying the difference if your homestate’s rate is higher. Some neighboring states also have reciprocity agreements that let you pay tax only to your home state, skipping the non-resident return entirely. For instance, Minnesota has reciprocity agreements with Michigan and North Dakota residents.
What happens if you don’t file
If you’re required to file a state tax return and don’t file, you can face penalties and interest on the unpaid amount of tax, or you may forgo a refund you are entitled to. It’s worth having your paperwork in order either way.
