Do I Have to Pay State Income Tax? | Skip Double Tax Traps

Most people pay state income tax where they live, with extra filings when they work or own property across state lines.

State income tax sounds simple until you move, work across a border, or earn money in more than one place. Then you see multiple states on a W-2, and the “Am I paying twice?” worry hits fast.

This walkthrough gives you a clean way to answer the question for your own year. Start with residency. Then check where each chunk of income was earned. After that, credits and withholding usually do the rest.

How state income tax works in plain terms

States that levy an individual income tax tend to sort people into residents, nonresidents, and part-year residents. Those labels decide how wide a net the state can cast.

Resident versus nonresident

Residents are usually taxed on income from all sources while they’re residents. Wages, self-employment, interest, dividends, and many retirement payments can all land in the same bucket, depending on the state.

Nonresidents are usually taxed only on income tied to that state. The tie is often where the work was performed, where property sits, or where a business operates.

State agencies spell out these rules in detail. California’s Franchise Tax Board is one place where you can see this, explaining that nonresidents pay tax on taxable income from California sources, while part-year residents pay tax on worldwide income during the months they were residents. California FTB part-year resident and nonresident rules.

Part-year resident in real life

Moves create part-year filing. Many times, you file a part-year return for the state you left and a part-year return for the state you entered. Each state taxes the slice connected to your resident months, plus any income sourced there after you left.

Some states add a “statutory resident” test that can treat you like a resident even when your main home is elsewhere. New York’s definitions are a clear example: domicile in the state, or a permanent place of abode plus 184 days in the state. New York “resident” definition for income tax.

Two questions that settle most cases

• Where were you a resident, month by month? That tells you which state can reach most income during those months.
• Where was the income earned or located? That tells you where nonresident returns can show up.

Do you have to pay state income tax in two states during a move

A mid-year move is the most common reason people file two state returns. It’s not a fine. It’s just how states split the year.

What usually gets filed

• Leaving a taxing state: a part-year resident return for the months you lived there.
• Entering a taxing state: a part-year resident return for the months you lived there.

If you moved into a no-tax state, you may still owe the old state for the months you lived there. If you moved out of a no-tax state into a taxing state, you may owe the new state for the months after you arrived.

What states check when you say “I moved”

Many states look for a real shift in where life happened: where you slept, where family lived, where vehicles were registered, and where your main home was available to you. When your documents line up with your timeline, the filing tends to be smoother.

Do I Have to Pay State Income Tax? Common scenarios

These are the patterns that come up over and over. Match yours, then gather the right records before you start entering numbers.

Live in one state, work in another

Often you file a nonresident return in the work state for wages earned there, then a resident return in your home state reporting all income. Many resident states offer a credit for income tax paid to another state, which is the usual way the same wages don’t get taxed twice.

Some neighboring states have reciprocity agreements for wage income. In that setup, residents pay tax only to their home state on wages, and the employer withholds for the home state once the right exemption form is on file.

Remote work across state lines

Remote work tends to come down to physical work location. If you worked from your home in State A, that’s often where the wages are sourced for State A purposes. If you spent part of the year working while traveling, keep a day log so your wage allocation is grounded in dates.

Own property or run a side business in another state

Rental income is commonly sourced to the state where the property sits. Business income can also be sourced to a state even if you did the work elsewhere, depending on how the state treats business presence and apportionment. If a state form shows withholding paid on your behalf, keep that page; it can offset what you owe.

Live in a no-income-tax state

Some states do not levy a broad wage income tax. Washington’s Department of Revenue states that Washington does not have an individual income tax. Washington Department of Revenue income tax page.

Florida’s Constitution includes language that blocks a state income tax on natural persons. The Florida Senate publishes the constitution text, including Article VII, Section 5. Florida Constitution text via the Florida Senate.

Living in a no-tax state does not erase tax tied to work performed in a taxing state. If you earned wages in a taxing state, that state may still expect a nonresident return.

At-a-glance filing map

This table compresses the core scenarios into a quick map. Use it to decide which returns to line up before you file.

Situation	Returns you may need	What often prevents double tax
Live and work in the same taxing state all year	One resident return	Normal withholding on wages
Live in State A, work in State B	Resident return (A) + nonresident return (B)	Credit on A for tax paid to B
Move from State A to State B mid-year	Part-year return (A) + part-year return (B)	Income split by dates you lived in each state
Live in a no-tax state, work in a taxing state	Nonresident return in the work state	Correct state wage reporting on the W-2
Own rental property in another state	Resident return + nonresident property-state return	Credit on resident return for property-state tax
Sell real estate in another state	Nonresident return for the sale state, plus your resident return	Credit on resident return; correct gain paperwork
Work travel in multiple states	Resident return + one or more nonresident returns	Day log that matches pay records
K-1 income from an out-of-state entity	Resident return; sometimes a nonresident return too	Use any state withholding shown on the K-1 packet

Credits, withholding, and why you rarely pay twice

Seeing two states on your income does not mean you’ll pay twice on the same dollars. The usual fix is a credit on your resident return for income tax paid to another state. The credit often reduces your home-state tax on that slice of income.

Why withholding is the make-or-break detail

Withholding is the down payment on your state tax bill. When your employer withholds for the state where the wages are sourced, your return becomes a calculation. When withholding follows the wrong state, you may need an extra return to claim a refund.

• Compare each W-2 state line to where you lived and worked.
• Check paystubs around a move date to see when withholding switched.
• If tax was withheld for a state where you neither lived nor worked, that state’s return may be the path to get that money back.

State income tax versus federal tax: the mix-up

Federal and state taxes are separate systems. A federal return does not replace a state return. Still, they connect because many states start their math from federal adjusted gross income.

If you itemize deductions on your federal return, you may be able to deduct state and local income taxes you paid, within federal limits. The IRS lists deductible taxes in Topic No. 503. IRS Topic No. 503 on deductible taxes.

Records that keep your filing clean

Multi-state issues usually come down to missing dates and missing proof. A small record set can save hours.

Core records

• W-2s, 1099s, and K-1s
• A work location log when you worked in more than one state
• Lease, deed, or closing paperwork if you moved or sold property
• Move dates: when utilities started, when a lease began, when registration changed

What a good work log looks like

Keep it simple: date, state, and a short note on where you worked. If you travel, pair the log with receipts like flights, hotels, tolls, or parking. If you work from home, a calendar export can be enough.

Quick checklist for common multi-state tax tasks

This table is built for the last mile. Use it as you gather papers and check that each state return has the same story.

Scenario	Records to gather	What those records show
Move mid-year	Lease/deed, utility start dates, license and registration change dates	Your resident period in each state
Work in another state	W-2 state wages, paystubs, worksite location	Which wages belong to the work state
Remote work in multiple states	Day log, travel receipts, employer work location notes	Physical work location by date
Rental property out of state	Schedule E records, property tax bills, management statements	Income tied to the property state
K-1 from an out-of-state entity	K-1 packet, state withholding pages, composite return statements	State tax already paid on your share
Sale of out-of-state real estate	Closing statement, basis records, improvement receipts	Gain amount and where it’s sourced

Putting it together before you file

Write a one-page timeline: where you lived, where you worked, and when income was earned. Then list every state that shows up on W-2s, 1099s, K-1s, and property records. That list is usually your return list.

If you need multiple state returns, many people prepare nonresident returns first, then finish the resident return so credits can be entered using final figures. When the numbers still look off, the fastest fix is often checking wage sourcing and withholding again.