Living in a tax-free state doesn’t mean you aren’t responsible for income taxes if you work in a bordering state.
Texas is an income tax-free state. Fantastic, right? It is for residents of Texas who both live and work in the state. For those that live in Texas but work in bordering states such as Louisiana, New Mexico or Oklahoma, there is an income tax to pay.
If you live in Texas but work in a different state, it’s best to learn the income tax details of the state you work in and the importance of filing a non-resident return for that state.
I Live in Texas but Work in Louisiana
If you work in Texas but travel to Louisiana for work, you will need to file a non-resident state return for Louisiana reporting all income earned from Louisiana sources.
Personal Louisiana Income Tax Rate:
Single Taxpayers:
- 2% on the first $12,500 of taxable income
- 4% on taxable income between $12,501 and $50,000
- 6% on taxable income of $50,001 and more
- For those married filing jointly, the rates are the same, the income brackets are just doubled.
For more on Louisiana’s income taxes, visit the Louisiana Department of Revenue website
I Live in Texas but Work in New Mexico
If you are one of the many people that lives in the Lone-star state but travels to New Mexico for work, you will need to file a non-resident state return for New Mexico reporting all income earned from New Mexico sources.
Personal New Mexico Income Tax Rate:
For Single Individuals:
- 1.7% on first $5,500 of taxable income
- $93.50 plus 3.2% of excess of income over $5,500 and below $11,000
- $269.50 plus 4.7% of excess of income over $11,000 and below $16,000
- $504.50 plus 5.7% of excess of income over $16,000
For married filing jointly:
- 1.7% on first $8,000 of income
- $136 plus 3.2% of excess of income over $8,000 and below $16,000
- $392 plus 4.7% of excess of income over $16,000 and below $24,000
- $768 plus 5.7% of excess of income $24,000
For married filing separately:
- 1.7% on first $4000 of income
- $68.00 plus 3.2% of excess of income over $4000 and below $8000
- $196 plus 4.7% of excess of income over $8000 and below $12,000
- $384 plus 5.7% of excess of income over $12,000
For more on New Mexico’s income taxes, visit the New Mexico Taxation and Revenue Department website
I Live in Texas but Work in Oklahoma
If you live in Texas but make frequent visits to Oklahoma for work, you will need to file a non-resident state return for Oklahoma reporting all income earned from Oklahoma sources.
Personal Oklahoma Income Tax Rate:
Oklahoma cut income tax rates in 2009 by more than 20%.
For single taxpayers and couples filing separately:
- 0.5% on the first $1,000 of taxable income.
- 1% on taxable income between $1,001 and $2,500.
- 2% on taxable income between $2,501 and $3,750.
- 3% on taxable income between $3,751 and $4,900.
- 4% on taxable income between $4,901 and $7,200.
- 5% on taxable income between $7,201 and $8,700.
- 5.25% on taxable income of $8,701 and above.
For married joint filers, heads of households and qualifying widows/widowers:
- 0.5% on the first $2,000 of taxable income.
- 1% on taxable income between $2,001 and $5,000.
- 2% on taxable income between $5,001 and $7,500.
- 3% on taxable income between $7,501 and $9,800.
- 4% on taxable income between $9,801 and $12,200.
- 5% on taxable income between $12,201 and $15,000.
- 5.255 on taxable income of $15,001 and above.
For more on Oklahoma’s income taxes, visit the Oklahoma’s tax commission website
How Do I File If I am married and work in a different state than my spouse?
If you live in an income tax free state (like Texas) and your spouse works in a state with income taxes while you do not, you can file a joint federal tax return with your spouse and file separate state returns.
Don’t forget to File Federal Taxes along with your Non-Resident State Taxes!
Living in Texas may mean you aren’t in tune with the state income taxes of your neighboring states. If you are just starting a job in one of these states while still holding residency in Texas, you’ll still have to pay state taxes. You can get started on both your federal and state taxes and file your taxes anytime with RapidTax.
Photo via M Glasglow on Flickr
What is the length of time you have to work in a state before you have to file in that state ? iE if your office is in Texas and you Periodically periodically work in NM
Hi Louis,
It depends on each specific state. A NM non-resident is not domiciled in New Mexico for any part of the tax year and not physically present in New Mexico for at least 185 days. You may check the NM state department of revenue site by clicking here.
Our company is in Texas, but we had an employee move to California and works for us remotely. I cannot get a clear answer on the tax situation from our payroll company or a CPA. Starting to get very frustrated with this. What does the company and employee need to do?
My husband lives and works in Texas, the kids and I live in Oklahoma. We plan on filing jointly, still. He has lived in Texas since September 2016, but JUST got his license to become a Texas resident a few weeks ago. Does he have to file as an Oklahoma resident because of this? He was in Oklahoma for only 4 days per month.
I live in Texas and company is based out of Texas but work in Oklahoma and Texas. Changes day to day where I am working. All my pay comes from Texas. Question is do I have to pay Oklahoma state tax?
If you earned income in Oklahoma, you may have to file a non-resident OK return.
Our company is based in Texas which our employees reside in Texas, if we have a few employees traveling to New Mexico to work as a truck driver for a project we are working on do they need to pay New Mexico’s state taxes? Their checks will still come out of Texas plus we don’t have an office in New Mexico for state property taxes.
You will need to discuss with the State offices or a local CPA of NM in order to determine whether or not the income earned from the project in NM is subjected to state taxes.