If you earned income in a state where you don’t live, you generally have to file a nonresident state tax return in that state. The main exceptions are income earned in a state with no personal income tax, wages covered by a reciprocity agreement with your home state, and military pay protected by federal law. Everything else — wages for work physically performed there, rental income from property located there, gambling winnings, your share of a business operating there — is “sourced” to that state and typically triggers a filing obligation.
What Counts as Income From Another State
States tax nonresidents on income with a connection to the state. That includes wages for work you physically performed inside the state, rent from property you own there, winnings from that state’s casinos or lotteries, and your share of profits from a partnership, S corporation, or LLC operating there.
Whether that income actually requires a return depends on the state’s filing threshold. As of 2026, 22 states have no meaningful floor: a single dollar of in-state income triggers a return. The rest use either a day-count rule, an income-based floor, or both. Day-count thresholds run from as few as 12 days (paired with a minimum income amount) up to 30 days of in-state work. Income-based floors vary by filing status, age, and dependents, with typical single-filer thresholds starting in the low-to-mid $20,000s of total gross income.1Tax Foundation. Nonresident Income Tax Filing and Withholding Laws by State, 2026
When You Don’t Have to File
The Nine States With No Income Tax
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not levy a personal income tax. If the only income you earned outside your home state was sourced to one of these, there is no nonresident income tax return to file. Some of these states still tax business income or certain investment income, so the exemption specifically covers the personal income tax on wages, salaries, and similar earnings.
Reciprocity Agreements With Neighboring States
About 16 states and the District of Columbia have reciprocal tax agreements with at least one neighbor. If you live in one participating state and commute to work in the other, you pay income tax only to your home state. The work state agrees not to tax your wages, and your employer withholds for your residence state instead.
Two limits matter. Reciprocity covers only W-2 wages and salary. Independent contractor income, rental income, business profits, and gambling winnings from the other state still require a nonresident return there. Reciprocity also generally does not extend to local or municipal income taxes, so you may still owe a city or county tax where you work.
To turn on the exemption, submit a certificate of nonresidence (sometimes called an exemption certificate) to your employer. If your employer withholds for the work state anyway, you’ll need to file a nonresident return there to get the money back, even though you don’t owe any tax.
Active-Duty Military and Their Spouses
Under the Servicemembers Civil Relief Act, military pay is taxable only in your state of legal residence, not the state where you’re stationed. A service member who moves across multiple states over a career keeps one tax home the entire time.2Office of the Law Revision Counsel. 50 USC 4001 – Residence for Tax Purposes
The Military Spouses Residency Relief Act extends similar protection to spouses. A military spouse can adopt the service member’s state of legal residence for tax purposes even if the spouse has never lived there, so the spouse’s earned income is taxable only in that chosen state rather than the state near the duty station. To use it, the spouse submits an exemption form to their employer to stop local withholding.3Military OneSource. The Military Spouses Residency Relief Act
Situations That Catch People Off Guard
Remote Work and the Convenience-of-the-Employer Rule
The default rule is that income is taxed where the work is physically performed. Work from your home office for an out-of-state employer, and your income is sourced to your home state.
Several states override that default with a “convenience of the employer” rule. If you work remotely for an employer based in one of these states, the state treats your income as if you’d earned it at the employer’s office unless the remote setup is a strict business necessity rather than a personal preference. A business necessity means the work literally cannot be performed at the employer’s location, such as a technician servicing equipment in the field. Preferring to work from home, or having a formal remote work agreement, does not qualify.4Tax Foundation. Teleworking Employees Face Double Taxation Due to Aggressive Convenience Rule Policies in Seven States
The result: a remote worker who has never set foot in the employer’s state can still owe a nonresident return there. The list of states enforcing this rule has shifted in recent years, so check the current rules in your employer’s state if you work remotely across state lines.
Owning a Piece of an Out-of-State Business
A share in a partnership, S corporation, or LLC taxed as a partnership can create a nonresident filing requirement in any state where the entity earns income, even if you’ve never visited. Your share of the in-state profits flows through to your personal return, and the source state may require its own return from you.
Many states let the entity file a composite return, paying tax on behalf of all its nonresident owners in a single filing. If your entity handles it that way, you can claim a credit on your home state return for tax already paid. Not every state offers composite filing, and some require individual owners to sign a separate agreement to opt out. Ask the entity’s tax preparer whether your share has already been reported.
Selling Real Estate You Own Elsewhere
Sell property in a state where you don’t live and you may owe tax on the gain. Roughly 15 states require the buyer or closing agent to withhold a portion of the sale price and send it to the state, at rates that run from about 2% to 8% of the sale price (some states calculate withholding on estimated gain instead).
You can often reduce or avoid withholding by filing an exemption certificate before closing. Common grounds include sales of a primary residence where the gain falls within the federal exclusion, like-kind exchanges, and sales below a price threshold. Even in states without mandatory withholding, any profit is taxable income sourced to that state, and you’ll need to file a nonresident return to report it.
How to File and Avoid Being Taxed Twice
Each state with an income tax has a dedicated nonresident form, usually with “NR” in its name. You report your total federal income on it and then calculate the portion sourced to that state. Most states accept electronic filing through their tax agency’s website or through commercial software. States share income data with the IRS, so mismatches between your federal return and your state filings tend to get flagged.
Need more time? About a dozen states automatically extend the state deadline when you file IRS Form 4868 for a federal extension. The rest require a separate state extension request. An extension to file is not an extension to pay: estimate what you owe and remit it by the original deadline to avoid late-payment penalties and interest.
Once you’ve paid the work state, claim a credit on your home state return so the same income isn’t taxed twice. Nearly every state with an income tax offers a “credit for taxes paid to another state.” Attach a copy of your nonresident return (or payment confirmation) to your home state filing. The credit is generally the lesser of what you actually paid the other state or what your home state would have charged on that income at its own rates. If the other state’s rate is higher, you won’t recover the full difference, but you also won’t owe your home state anything more on that income. If the other state’s rate is lower, you’ll owe your home state the gap.
What Happens If You Skip It
Late-filing penalties can reach 25% of the unpaid tax, and interest accrues monthly on any balance due. Even when the tax itself is small, the penalties alone can turn a minor obligation into a costly one. If you’re unsure whether a state’s threshold applies to you, checking the current filing rules before the deadline is cheaper than sorting it out afterward.