Live in Tennessee, Work Remotely for a Pennsylvania Employer: Who Taxes You?
Answer
Pennsylvania taxes you and nothing offsets it. Its convenience-of-the-employer rule sources your remote workdays to Pennsylvania even though you never go there, and Tennessee has no income tax — so there is no resident return on which to claim a credit for the Pennsylvania tax.
Last verified
Moving to a no-income-tax state is the standard remote-work tax plan, and against a convenience-rule employer it is the one move that backfires. Pennsylvania keeps taxing the wages, and Tennessee no longer provides a return on which to claim relief.
Pennsylvania sources a nonresident's remote workdays to Pennsylvania when the employee works from home for their own convenience rather than at the employer's requirement. The reciprocal agreements override it: a New Jersey resident working remotely for a Pennsylvania employer owes Pennsylvania nothing.
The rule is not an administrative preference. Pennsylvania applies it under 61 Pa. Code §109.8, and the burden of showing that remote work is an employer necessity rather than an employee convenience falls on you and your employer, not on Pennsylvania Department of Revenue.
Pennsylvania also has a layer below the state one, and it is the layer that survives every agreement: Pennsylvania's Act 32 earned income tax is levied by municipalities and school districts across the state, and Philadelphia levies its own wage tax on residents and on nonresidents who work in the city. None of it is covered by the reciprocal agreements, and Philadelphia's nonresident wage tax applies from the first dollar.
What you file
- 1Nonresident return · PennsylvaniaForm PA-40 (nonresident)
File a Pennsylvania nonresident return. Tennessee does not tax wages, so there is no resident return and therefore no credit anywhere to offset the Pennsylvania tax — this is the worst version of the convenience rule.
The two states, side by side
| Tennessee | Pennsylvania | |
|---|---|---|
| Taxes wages | No | Yes — flat |
| Reciprocity partners | None | 6 (Form REV-419) |
| Convenience rule | No | Yes — general rule |
| Nonresident return | Not applicable | Form PA-40 (nonresident) |
| Credit for other-state tax | No income tax | Schedule G-L |
| Nonresident safe harbour | Not applicable | None published |
| Local income tax | No | Yes |
| Revenue department | Tennessee Department of Revenue | Pennsylvania Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Pennsylvania 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 → PennsylvaniaWork state only
- 1099 contractor: Tennessee → PennsylvaniaClient state only, if you work there
- Moved mid-year: Tennessee → PennsylvaniaOne part-year return — the state you moved to
Other Tennessee pairs
Questions people actually ask
I live in Tennessee and work remotely for a Pennsylvania employer. Which state do I pay?
Pennsylvania taxes you and nothing offsets it. Its convenience-of-the-employer rule sources your remote workdays to Pennsylvania even though you never go there, and Tennessee has no income tax — so there is no resident return on which to claim a credit for the Pennsylvania tax.
Which state should my employer be withholding for?
Pennsylvania. The wages are sourced to Pennsylvania, so Pennsylvania withholding is correct and there is no Tennessee withholding to set up, because Tennessee levies no income tax on wages.
Can I claim a credit for the Pennsylvania tax?
No, and that is what makes this case unusual. A credit for taxes paid to another state is claimed on a resident return, and Tennessee does not have one — it levies no personal income tax. The Pennsylvania tax is your final cost on this income unless your employer can establish that your remote work is a business necessity.
How current is this?
The Tennessee and Pennsylvania rules on this page were last checked against Tennessee Department of Revenue and Pennsylvania 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.
- Tennessee Department of Revenue — individual income taxaccessed 2026-08-07
- Pennsylvania Department of Revenue — individual income taxaccessed 2026-08-07
- Pennsylvania — Form REV-419accessed 2026-08-07
- Pennsylvania Personal Income Tax Guide — Income Subject to Tax Withholdingaccessed 2026-08-07