I moved from CA to TX. Why is CA still taxed on my paycheck?

Payroll has not updated your residence. Tell HR your new address. CA continues to tax until then, and you may need a part-year resident return for the year you moved.

I work remotely from NJ for a NY employer. Why is NY tax taken?

New York applies the convenience-of-employer rule. If your remote work from NJ is for the employer's convenience rather than your own necessity, NY taxes the wages. NJ allows a credit on its return for tax paid to NY.

How do I claim a state tax credit for tax paid elsewhere?

On your residence state return, claim the credit for tax paid to another state. The form name varies by state but is usually called "credit for taxes paid to another state."

Why Am I Paying State Tax for a State I Don't Live In?

You moved out of state, or you started remote work, or you commute across a state line. Now your pay stub shows state tax for a state you do not consider home. Several rules can cause this.

PayslipIQ provides educational information and estimated calculations only. It does not provide tax, legal, financial, accounting, employment, benefits, or payroll advice. PayslipIQ is not a CPA firm, law firm, financial advisor, payroll provider, or tax authority. Always verify your paycheck, deductions, withholdings, and tax position with your employer's payroll department, a qualified CPA, the IRS, your state tax authority, or another appropriately qualified professional. Calculations are estimates; your actual paycheck may differ based on factors specific to your employer, location, benefits elections, and personal tax situation.

Work-location state tax

Most states tax wages earned within their borders, regardless of where the employee lives. If you physically perform work in a state, that state can tax those wages. You usually file a non-resident return there at year-end.

Convenience-of-employer rule

New York, Connecticut, Delaware, Nebraska and Pennsylvania (in some scenarios) apply this rule. Even if you work remotely from another state, if it is for the employer's convenience and not your own necessity, the employer's state can still tax you. New York is the most aggressive.

You moved but did not update payroll

If you moved states and did not tell payroll, your employer continues withholding for the old state. Update your residence address with HR or payroll immediately.

Reciprocity not applied

If your state and the work state have a reciprocity agreement (PA-NJ for some, IL-IN, MD-VA), you can usually file an exemption form so payroll only withholds for your residence state. If you did not file the exemption, both states show on your stub.

What to do

Confirm your residence address with payroll.
Ask which state(s) they are withholding for and why.
If reciprocity applies, file the exemption form.
If you moved mid-year, file part-year resident returns in both states.
Talk to a CPA if you have multi-state work or income.

Frequently asked questions

I moved from CA to TX. Why is CA still taxed on my paycheck?: Payroll has not updated your residence. Tell HR your new address. CA continues to tax until then, and you may need a part-year resident return for the year you moved.
I work remotely from NJ for a NY employer. Why is NY tax taken?: New York applies the convenience-of-employer rule. If your remote work from NJ is for the employer's convenience rather than your own necessity, NY taxes the wages. NJ allows a credit on its return for tax paid to NY.
How do I claim a state tax credit for tax paid elsewhere?: On your residence state return, claim the credit for tax paid to another state. The form name varies by state but is usually called "credit for taxes paid to another state."