Working across state lines has become increasingly common, whether due to remote work, regional responsibilities, or travel-heavy roles. As an over-the-road truck driver, you may be wondering if you are subject to multi-state taxation. Let’s dive into how how states assert taxing rights and when exceptions to multi-state taxation apply.
How do States Determine Whether to Tax Income?
When you earn income in a state, that state’s jurisdiction may claim the right to tax that income. Generally, states tax income based on two principles:
- Residency: Your home state taxes all of your income, regardless of where it is earned.
- Non-Resident Income: Income you earn in a state where you’re not a resident will generally require a non-resident income tax return. Whether you need to file depends on how much income you earned in that state. A common example is gambling winnings earned outside your home state.
- Common examples of taxpayers who are subject to tax in each state they earn income in include traveling nurses, construction workers, and traveling salespeople.
Exception for Over-the-Road Truck Drivers.
A notable exception to multi-state taxation rules applies to over-the-road truck drivers. Under federal law (specifically 49 U.S.C. § 14503), states are generally prohibited from taxing compensation earned by taxpayers engaged in interstate motor carrier transportation unless:
- The employee is a resident of the state; or
- The employee performs services entirely within that state (not in interstate commerce)
This means that income earned by over-the-road truck drivers is typically taxed only in their state of residence. States usually cannot tax workers who only pass through or do incidental amounts of work there, which makes tax filing easy even if you cross state lines.
For more information about multi-state taxation and how it applies, give Abacus! a call at (417) 380-5000.
