Live in Hawaii, Work Remotely for a Iowa Employer: Who Taxes You?
Answer
Your home state takes it and the work state does not. Iowa levies no tax on wages; Hawaii taxes residents on all income regardless of where it was earned. The result is a single Hawaii resident return covering the full amount, with no offsetting credit.
Last verified
The instinct that working in a no-tax state means paying no tax is the single most expensive misunderstanding in this niche. Iowa takes nothing, but Hawaii still taxes residents on income earned anywhere, so the full amount lands on your Hawaii return.
Iowa also has a layer below the state one, and it is the layer that survives every agreement: Many Iowa school districts levy a surtax calculated as a percentage of state income tax. It is reported on the state return rather than separately.
What you file
- 1Resident return · Hawaii
File a Hawaii resident return reporting all of your income.
The two states, side by side
| Hawaii | Iowa | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | None | 1 (Form 44-016) |
| Convenience rule | No | No |
| Nonresident return | Form N-15 | Form IA 1040 with Schedule IA 126 |
| Credit for other-state tax | Schedule CR | Form IA 130 |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | Yes |
| Revenue department | Hawaii Department of Taxation | Iowa Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Iowa 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 → IowaBoth states — credit offsets the double tax
- 1099 contractor: Hawaii → IowaHome state, plus the client state if you work there
- Moved mid-year: Hawaii → IowaTwo part-year returns
Other Hawaii pairs
Questions people actually ask
I live in Hawaii and work remotely for a Iowa employer. Which state do I pay?
Your home state takes it and the work state does not. Iowa levies no tax on wages; Hawaii taxes residents on all income regardless of where it was earned. The result is a single Hawaii resident return covering the full amount, with no offsetting credit.
Which state should my employer be withholding for?
Hawaii. Your employer should withhold Hawaii tax rather than Iowa tax on these wages. If a Iowa line is showing on your pay stub, raise it with payroll now rather than at filing time.
Does my Iowa employer's location alone create a Iowa tax obligation?
No. Iowa 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 Iowa are a different matter — those are Iowa-source income and can require a nonresident return.
How current is this?
The Hawaii and Iowa rules on this page were last checked against Hawaii Department of Taxation and Iowa Department of Revenue 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
- Iowa Department of Revenue — individual income taxaccessed 2026-08-07