Are state/local income taxes assessed based on where you work, or where you live? Or does it vary?

Question

Are state/local income taxes assessed based on where you work, or where you live? Or does it vary?

Answer 1

Both.  Typically, you pay state and local income taxes to the locality in which you work and you then take a credit for taxes paid to other jurisdictions on the income tax return for the state in which you live.

Answer 2

Varies - can be either, or both.

Answer 3

I depends.

There are various scenarios and the answer depends on which two states that you are talking about.

Answer 4

Both where you work and where you live.

Your home state wants a report, and based on the state rules, taxes from your income. Each state has a formula to determine how much is "state income." Actually, there are a handful of states that don't have an income tax, too.

Also, the state you work at will want a cut of the action, too. It also has a formula, which may be different from the home state.

Some cites also have taxes for income earned in the city.

Just be grateful you are not a pro athlete!