Live in Minnesota, Work Remotely for a Colorado Employer: Who Taxes You?
Answer
Minnesota taxes the income and Colorado cannot. Residency, not the location of the job, drives this answer: Minnesota reaches all of a resident's income, and Colorado has no personal income tax to apply to the part earned inside its borders.
Last verified
The instinct that working in a no-tax state means paying no tax is the single most expensive misunderstanding in this niche. Colorado takes nothing, but Minnesota still taxes residents on income earned anywhere, so the full amount lands on your Minnesota return.
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 · Minnesota
File a Minnesota resident return reporting all of your income.
The two states, side by side
| Minnesota | Colorado | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | 2 (Form MWR) | None |
| Convenience rule | No | No |
| Nonresident return | Form M1 with Schedule M1NR | Form DR 0104 with Schedule DR 0104PN |
| Credit for other-state tax | Schedule M1CR | Form DR 0104CR |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | Yes |
| Revenue department | Minnesota Department of Revenue | 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 Minnesota 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: Minnesota → ColoradoBoth states — credit offsets the double tax
- 1099 contractor: Minnesota → ColoradoHome state, plus the client state if you work there
- Moved mid-year: Minnesota → ColoradoTwo part-year returns
Other Minnesota pairs
Questions people actually ask
I live in Minnesota and work remotely for a Colorado employer. Which state do I pay?
Minnesota taxes the income and Colorado cannot. Residency, not the location of the job, drives this answer: Minnesota reaches all of a resident's income, and Colorado has no personal income tax to apply to the part earned inside its borders.
Which state should my employer be withholding for?
Minnesota. Your employer should withhold Minnesota 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 Minnesota and Colorado rules on this page were last checked against Minnesota Department of Revenue 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.
- Minnesota Department of Revenue — individual income taxaccessed 2026-08-07
- Colorado Department of Revenue — Taxation Division — individual income taxaccessed 2026-08-07