State Taxation of Foreign Nationals
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State Taxation of Foreign Nationals
If you have taxable income on your federal return, or state income taxes were withheld from your income, you might have to file a return with the state in which you earned the income. All but seven states in the United States impose income taxes on individuals similar to the federal income tax (but with lower rates). The states that do not impose an income tax on individuals are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. States that do not impose an income tax on wages are New Hampshire and Tennessee.
States are independent from one another in their taxing authority, and all state tax forms differ in some respects. State income tax forms usually start with federal taxable income, or federal adjusted gross income, and require a few adjustments.
State Treatment of Tax Treaties
The states are not bound to honor federal tax treaties, but most do. Those that do not are Alabama, Arkansas, California, Connecticut, Hawaii, Kansas, Kentucky, Maryland, Mississippi, Montana, New Jersey, North Dakota, and Pennsylvania. If you live or work in one of these states, you will owe state income tax even though your income is exempt from federal income tax by a treaty.