Live in North Dakota, Work Remotely for a Iowa Employer: Who Taxes You?
Answer
One state, one return: North Dakota. Iowa has no wage income tax, so working there changes nothing about what you owe. Your North Dakota resident return reports the Iowa income along with everything else, and there is no credit to claim because Iowa charged you nothing.
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. North Dakota reaches all of a resident's income, and Iowa adds nothing on top.
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 · North Dakota
File a North Dakota resident return reporting all of your income.
The two states, side by side
| North Dakota | Iowa | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | 2 (Form NDW-R) | 1 (Form 44-016) |
| Convenience rule | No | No |
| Nonresident return | Form ND-1 with Schedule ND-1NR | Form IA 1040 with Schedule IA 126 |
| Credit for other-state tax | Schedule ND-1CR | Form IA 130 |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | Yes |
| Revenue department | North Dakota Office of State Tax Commissioner | Iowa Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Iowa and working in North Dakota 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: North Dakota → IowaBoth states — credit offsets the double tax
- 1099 contractor: North Dakota → IowaHome state, plus the client state if you work there
- Moved mid-year: North Dakota → IowaTwo part-year returns
Other North Dakota pairs
Questions people actually ask
I live in North Dakota and work remotely for a Iowa employer. Which state do I pay?
One state, one return: North Dakota. Iowa has no wage income tax, so working there changes nothing about what you owe. Your North Dakota resident return reports the Iowa income along with everything else, and there is no credit to claim because Iowa charged you nothing.
Which state should my employer be withholding for?
North Dakota. Your employer should withhold North Dakota 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 North Dakota and Iowa rules on this page were last checked against North Dakota Office of State Tax Commissioner 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.
- North Dakota Office of State Tax Commissioner — individual income taxaccessed 2026-08-07
- Iowa Department of Revenue — individual income taxaccessed 2026-08-07