Part-Year Resident Taxes: How Moving States Affects Your Return

When you move between states during the tax year, you typically file part-year resident returns in both states. Each state taxes only the income you earned while you were a resident (or income sourced to that state). You will not be double-taxed on the same income if you handle the filing correctly.

What part-year residency means

A part-year resident is someone who lived in a state for only a portion of the tax year. Most states define you as a part-year resident for the period during which you were domiciled there or physically present with the intent to make that state your home. Once you establish a new domicile in another state, you become a part-year resident of both states for that calendar year.

Part-year resident status is different from nonresident status. A nonresident never lived in the state but may have earned income there, such as wages from a job located in a state where you do not live. Part-year residents file on a different form (usually a part-year or resident return for the portion of the year they lived there) while nonresidents file a separate nonresident return.

Most states have a specific part-year resident form or a checkbox on the standard resident return. Check the instructions for each state where you lived during the year. You can find each state's tax forms and instructions through our state tax directory.

How to split income between states

The most common method for allocating wage income between two states is the days-of-residency method. Here is how it works:

1. Count your days in each state. Determine the exact date you moved (typically the date you established a new domicile, not just the date you began physically living there). Count the number of days you were a resident of each state during the tax year.
2. Calculate each state's percentage. Divide the days in each state by the total days in the year. For example, if you lived in State A for 120 days and State B for 245 days, State A gets 32.9% of your wages and State B gets 67.1%.
3. Apply the percentages to your wages. Multiply your total W-2 wages by each state's percentage. Report each amount on that state's part-year return.

Some filers use actual pay periods instead of days, especially if the move date falls neatly between payroll cycles. Check each state's instructions to confirm which method is required or preferred. A handful of states mandate a specific allocation approach.

Which state gets which income

Different types of income follow different rules when you are a part-year resident:

• Wages and salary: Allocated based on where you performed the work, or by days/pay periods if you worked in both states throughout the year. If you worked remotely for the same employer both before and after your move, allocate by work location.
• Investment income (dividends, interest, capital gains):Generally taxed by the state where you were domiciled when you received the income. If you received a dividend in March while living in State A and another in October after moving to State B, each state taxes its respective dividend. Keep records of when each distribution was received.
• Self-employment income: Sourced to the state where the work was performed. If you did consulting work from your home office, income is sourced to the state where the home office was located at the time.
• Rental income: Taxed by the state where the rental property is located, regardless of where you live. You may owe a nonresident return in that state even after you move away.
• Retirement distributions: Generally taxed by your state of domicile at the time of distribution. Each state has its own rules on pension and IRA taxation; see our state pages for details.

The credit for taxes paid to another state

Most states prevent double taxation through a resident credit, also called a credit for taxes paid to another state. The mechanism works like this:

1. You file a part-year (or nonresident) return in the state where you earned income after moving. You pay that state its tax on the income sourced there.
2. You file your resident or part-year return in your new home state. That state also claims the right to tax your total income during your period of residency.
3. Your new home state grants a credit equal to the lesser of: the tax you actually paid to the other state, or the tax your home state would have charged on that same income.

The credit is not always dollar-for-dollar. If your old state has a higher tax rate than your new state, your new state's credit may be capped at the new state's rate. You would not owe the difference to either state, but you would not get a refund of the excess either.

For more on how the credit works in situations where two states claim the same income, see Can Two States Tax the Same Income?

Common pitfalls to avoid

• Forgetting to file in the old state. Many people assume that once they move, their old state no longer has a claim. That is wrong. Your old state taxes income you earned while you were a resident, and it has records from your employer's withholding. File the return even if the amount is small.
• Using the wrong move date. Residency typically changes on the date you establish a new domicile, not necessarily the date the moving truck arrives. If you signed a lease, bought a home, or registered to vote in the new state, document that date carefully.
• Not updating your withholding promptly. If you move mid-year but your employer keeps withholding for the old state, you may owe more to the new state and have an overpayment in the old state. Notify payroll of your new address as soon as possible after moving.
• Allocating investment income incorrectly. A common mistake is splitting annual dividend income by days in each state. If the dividends were all paid before you moved, they belong entirely to the old state. Use actual payment dates, not a pro-rata allocation.
• Ignoring states with no income tax. If you moved to a state with no income tax (such as Florida, Texas, or Nevada), you still must file a part-year return in the state you left if that state has an income tax and you had income while living there.

W-2 implications when you move

Your W-2 reflects what your employer withheld for state taxes. When you move mid-year, one of three things typically happens:

• One W-2 with two state boxes. Box 15 on the W-2 can list up to two states. A good payroll system will split your wages and withholding between your old and new state automatically once you update your address. Verify the amounts match your own allocation calculation.
• One W-2 with only one state. If your employer's payroll system did not update in time, your W-2 may show only one state. You will need to calculate the allocation yourself and file in both states using your own records. The state not listed on the W-2 will have no withholding shown, so you may owe a balance there.
• Two separate W-2s. Some employers issue a separate W-2 for each state in which you worked. If you receive two, treat each as applying to the respective state's return.

If your W-2 does not reflect the correct state allocation, contact your employer's payroll department. Request a corrected W-2 (W-2c) if the amounts are significantly wrong. Keep a copy of your pay stubs from around the move date as documentation.

When residency officially changes

States define the start and end of residency in slightly different ways, but most use some version of domicile: the place you consider your permanent home and to which you intend to return. Establishing a new domicile typically involves:

• Purchasing or renting a home in the new state
• Registering to vote in the new state
• Obtaining a driver's license in the new state
• Moving the majority of your personal belongings
• Changing your mailing address and banking records
• Updating your employer's records

No single action is conclusive, but the combination of these steps creates a clear record of when you changed your domicile. If a state revenue department ever questions your move date, contemporaneous documentation (lease agreements, utility bills, vehicle registration) will be your best evidence.

Some states have additional safe-harbor rules or specific tests for high-income individuals. For states with a 183-day presence test, see The 183-Day Rule: State Tax Residency Explained.

If you are planning a move specifically for retirement tax benefits, see our retirement moving checklist for a full breakdown of what to evaluate before you go.