Live in Hawaii, Work Remotely for a Colorado Employer: Who Taxes You?
Answer
Hawaii gets all of it. Because Colorado does not tax wage income, no Colorado withholding exists and no Colorado return is required — but Hawaii taxes residents on worldwide income, so every dollar earned in Colorado still belongs on your Hawaii resident return.
Last verified
Crossing into a state with no income tax does not lower your tax bill, because your home state is not taxing you on where you work — it is taxing you on where you live. Hawaii reaches all of a resident's income, and Colorado adds nothing on top.
Colorado also has a layer below the state one, and it is the layer that survives every agreement: A few Colorado cities levy an occupational privilege tax — a flat monthly head charge on anyone working in the city, not a percentage of income. It is not an income tax and no credit offsets it.
What you file
- 1Resident return · Hawaii
File a Hawaii resident return reporting all of your income.
The two states, side by side
| Hawaii | Colorado | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Form N-15 | Form DR 0104 with Schedule DR 0104PN |
| Credit for other-state tax | Schedule CR | Form DR 0104CR |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | Yes |
| Revenue department | Hawaii Department of Taxation | Colorado Department of Revenue — Taxation Division |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Colorado and working in Hawaii gives:Home state only.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- W-2 commuter: Hawaii → ColoradoBoth states — credit offsets the double tax
- 1099 contractor: Hawaii → ColoradoHome state, plus the client state if you work there
- Moved mid-year: Hawaii → ColoradoTwo part-year returns
Other Hawaii pairs
Questions people actually ask
I live in Hawaii and work remotely for a Colorado employer. Which state do I pay?
Hawaii gets all of it. Because Colorado does not tax wage income, no Colorado withholding exists and no Colorado return is required — but Hawaii taxes residents on worldwide income, so every dollar earned in Colorado still belongs on your Hawaii resident return.
Which state should my employer be withholding for?
Hawaii. Your employer should withhold Hawaii tax rather than Colorado tax on these wages. If a Colorado line is showing on your pay stub, raise it with payroll now rather than at filing time.
Does my Colorado employer's location alone create a Colorado tax obligation?
No. Colorado sources wages to the place where the work is physically performed, and it does not apply a convenience-of-the-employer rule that would override that. Days you actually spend working inside Colorado are a different matter — those are Colorado-source income and can require a nonresident return.
How current is this?
The Hawaii and Colorado rules on this page were last checked against Hawaii Department of Taxation and Colorado Department of Revenue — Taxation Division on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- Hawaii Department of Taxation — individual income taxaccessed 2026-08-07
- Colorado Department of Revenue — Taxation Division — individual income taxaccessed 2026-08-07