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An example. Let's say you live in Texas for half year. For the rest of your year, you move to Oregon. You make $100k a year, Texas source of income and continue to have the same job when in Oregon.
Now, Texas doesn't have income tax and Oregon has 9%.
Next year you need to file federal tax return and Oregon tax return. Probably no Texas tax return since Texas doesn't have income tax.
Is it going to be scenario:
A) Oregon gets only 6 months (half) of the income tax money.
The tax taken out prior to receiving your paycheck however often you receive it. So if you get paid every two weeks, you pay 9% on two weeks of your income or if you're paid every month you pay 9% on one month of your income.
The answer would be "A". States generally subject their taxes on all income earned while a tax resident of that state, regardless of where the income was earned.
Thank you, so if I understand correctly, only for the months for which I am resident in a given state I have to pay the state income tax.
Correct.
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