Nonresident Income Tax Filing and Withholding Laws by State

Notable Changes for 2026

Alabama, which previously offered no meaningful relief for nonresidents, adopted a 30-day nonresident filing and withholding threshold with a mutuality requirement specifying that such relief is available only to residents of states that provide a “substantially similar exclusion” or do not levy an individual income tax.
Louisiana increased its nonresident filing and withholding threshold from 25 to 30 days and, importantly, repealed the mutuality requirement that was previously in place.
Minnesota’s nonresident filing threshold matches its standard deductionThe standard deduction reduces a taxpayer’s taxable income by a set amount determined by the government. Taxpayers who take the standard deduction cannot also itemize their deductions; it serves as an alternative. for single filers, which is adjusted for inflation. This threshold increased from $14,950 in 2025 to $15,300 in 2026.
Oregon’s nonresident filing threshold varies by filing status and matches the state’s standard deduction, which is indexed for inflation. Oregon’s filing threshold increased from $2,835 to $2,910 for single filers and from $5,670 to $5,820 for joint filers.

Credits for Taxes Paid to Other States

Individuals who reside in a state with an income tax can claim a credit from their home state for income taxes paid to other states, so while paying income taxes to other states as a nonresident does not necessarily increase an individual’s total state tax liability (this depends on whether the other state has higher rates on that income), it does substantially increase the complexity and costs associated with filing. Since states tax individuals where they live and where they work, it is common for more than one state to stake a legitimate claim to the same share of a taxpayer’s income. Credits for taxes paid to other states are therefore critical to prevent double taxation.

Mutuality Requirements

In some states with day-based thresholds, those thresholds do not apply to everyone. Currently, four states—Alabama, North Dakota, Utah, and West Virginia—have a “mutuality requirement” that extends filing relief only to nonresidents who live in a state that does not levy an individual income tax or that offers a “substantially similar” exclusion. For example, in general, a resident of Indiana who works in Utah for 20 days or fewer is not required to file in Utah, since Indiana has a similar threshold. However, since Colorado does not have a meaningful filing threshold, a Colorado resident who spends even a single day working in Utah is not eligible for Utah’s safe harbor and is therefore required to file on day one. Since “substantially similar exclusion” is not clearly defined in regulations, taxpayers can be left in the dark on whether their own state’s provisions are adequate to qualify for relief elsewhere.

Illinois, Indiana, Louisiana, and Montana, with 30-day thresholds, are currently the only states that have day-based thresholds that apply broadly to nonresidents regardless of which state they hail from. Forgoing mutuality requirements is the simpler and more neutral approach, as this relieves compliance burdens for more individuals and businesses and treats nonresidents neutrally, regardless of the decisions made by policymakers in the states in which they reside.

Filing on Day One

In states that require nonresidents to file for a single day of work in the state, the costs of compliance can be much higher than the amount of taxes remitted. There are many situations in which a taxpayer might owe only a few dollars—or nothing at all—but still face a legal obligation to file, which can cost $59 or more using tax filing software. This can add up quickly for those who travel to different states and municipalities for work.

Additionally, low- or zero-dollar tax returns can easily cost states more to process than is remitted with the return. In practice, revenue departments are typically much more concerned about the compliance of high-income nonresidents (such as professional athletes and entertainers) than of average taxpayers who spend a short time working in the state. And unless an employer adjusts an individual’s withholding for work performed in non-domiciliary states, revenue departments typically do not know (or cannot prove) that an individual spent time working in the state without filing a tax return. Ultimately, keeping laws on the books that are unenforceable or are not worth enforcing is bad tax policy, especially when such policies generate little revenue while creating steep compliance burdens for the honest taxpayers who try to comply.

Nonresident Filing and Withholding Thresholds Oftentimes Do Not Match

In 16 states, nonresident income tax filing and withholding thresholds differ. For example, employers are only required to withhold Arizona’s income taxes when a nonresident employee spends 60 days or more working in Arizona, but the nonresident employee is required to file on day one. Some taxpayers, unaware that filing and withholding thresholds often differ, may mistakenly interpret their employer’s lack of withholding to mean they have no filing obligation.

In states like Idaho, Iowa, Minnesota, and Oklahoma, the reverse is true, with filing thresholds that are more generous than withholding thresholds. While this may sound like a form of relief for individuals, such discrepancies can result in over-withholding that puts individual taxpayers on the hook to file a nonresident return if they want to receive a refund. (And such refunds typically only help taxpayers when their income tax liability in their non-domiciliary state would have been substantially higher than their tax liability on that same income in their home state.) For more information about states’ nonresident income tax withholding thresholds, see our nonresident income tax primer.

Nonresident Individual Income Tax Filing and Withholding Thresholds (as of January 1, 2026)

Notes: (a) State has a mutuality requirement, whereby its filing/withholding threshold applies only to nonresidents from states that do not levy an individual income tax or that offer a “substantially similar exclusion.” (b) Threshold is adjusted annually for inflation. (c) Nebraska offers filing and withholding relief to nonresidents attending a conference or training who spend 7 days or fewer in the state and earn not more than $5,000 in the state. (d) Threshold varies by filing status; single filer amount is shown. (e) Federal law prohibits the District of Columbia from taxing nonresidents’ income. Source: Tax Foundation; Bloomberg Tax; state statutes.

Local Income Taxes Too?

Adding to the complexity, 14 states—Alabama, Colorado, Delaware, Indiana, Iowa, Maryland, Michigan, Missouri, New Jersey, New York, Ohio, Oregon, Pennsylvania, and West Virginia—have local income taxes that sometimes apply to nonresidents, increasing the costs of compliance, especially for those who spend only a short time working in any given city or county. Ultimately, more states should move away from local income taxes altogether or avoid applying them to nonresidents (as is the case in Kansas and Kentucky).

Opportunities for Reform

At the federal level, the Mobile Workforce State Income Tax Simplification Act would establish a uniform 30-day nonresident individual income tax filing and withholding threshold across the states. But unless Congress acts, taxpayers will continue to face a complex patchwork of state laws.

This leaves state policymakers with an opportunity to adopt state-level reforms that reduce complexity and compliance costs for individuals and employers and streamline administrative and enforcement costs for states. More states should consider following in the footsteps of Illinois, Indiana, Louisiana, and Montana, adopting 30-day filing and withholding thresholds, which many stakeholders agree strike an appropriate balance between reducing compliance burdens and allocating revenue to states in which a substantial amount of work is performed by nonresidents. If most states adopted such thresholds, the state income tax landscape would become substantially less burdensome for America’s increasingly mobile workforce.