Live in Tennessee, Work Remotely for a Hawaii Employer: Who Taxes You?
Answer
Hawaii cannot follow the paycheck home. Because Hawaii sources wages to the place of performance and you perform them in Tennessee, the income is Tennessee-source; and Tennessee does not tax wages. The result is no state income tax on these earnings at all.
Last verified
An employer's address is not a tax nexus for its employees. Working from Tennessee keeps the income Tennessee-source, and since Tennessee levies no tax on wages, the income lands nowhere at all.
What you file
There is nothing to file in either Tennessee or Hawaii on these wages. Your federal return is unaffected — the federal government taxes the income whatever the states do.
The two states, side by side
| Tennessee | Hawaii | |
|---|---|---|
| Taxes wages | No | Yes — graduated |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Not applicable | Form N-15 |
| Credit for other-state tax | No income tax | Schedule CR |
| Nonresident safe harbour | Not applicable | None published |
| Local income tax | No | No |
| Revenue department | Tennessee Department of Revenue | Hawaii Department of Taxation |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Hawaii and working in Tennessee 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: Tennessee → HawaiiWork state only
- 1099 contractor: Tennessee → HawaiiClient state only, if you work there
- Moved mid-year: Tennessee → HawaiiOne part-year return — the state you moved to
Other Tennessee pairs
Questions people actually ask
I live in Tennessee and work remotely for a Hawaii employer. Which state do I pay?
Hawaii cannot follow the paycheck home. Because Hawaii sources wages to the place of performance and you perform them in Tennessee, the income is Tennessee-source; and Tennessee does not tax wages. The result is no state income tax on these earnings at all.
Which state should my employer be withholding for?
Neither. There is no state income tax to withhold on either side of this pairing, so a state line on your pay stub for Tennessee or Hawaii is an error worth querying.
Does my Hawaii employer's location alone create a Hawaii tax obligation?
No. Hawaii 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 Hawaii are a different matter — those are Hawaii-source income and can require a nonresident return.
How current is this?
The Tennessee and Hawaii rules on this page were last checked against Tennessee Department of Revenue and Hawaii Department of Taxation 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.
- Tennessee Department of Revenue — individual income taxaccessed 2026-08-07
- Hawaii Department of Taxation — individual income taxaccessed 2026-08-07