Live in Texas, Work Remotely for a Indiana Employer: Who Taxes You?
Answer
This is the best case in the whole matrix. Living in a no-income-tax state and working remotely for an employer in Indiana — a state with no convenience rule — means no state withholding and no state return anywhere. Check that your employer is not withholding Indiana tax by mistake.
Last verified
An employer's address is not a tax nexus for its employees. Working from Texas keeps the income Texas-source, and since Texas levies no tax on wages, the income lands nowhere at all.
Indiana also has a layer below the state one, and it is the layer that survives every agreement: Every Indiana county levies its own income tax, and the reciprocal agreements do not cover it. A resident of a reciprocal state who works in Indiana still pays Indiana county tax on those wages.
What you file
There is nothing to file in either Texas or Indiana on these wages. Your federal return is unaffected — the federal government taxes the income whatever the states do.
The two states, side by side
| Texas | Indiana | |
|---|---|---|
| Taxes wages | No | Yes — flat |
| Reciprocity partners | None | 5 (Form WH-47) |
| Convenience rule | No | No |
| Nonresident return | Not applicable | Form IT-40PNR |
| Credit for other-state tax | No income tax | Schedule 6 (Form IT-40PNR) |
| Nonresident safe harbour | Not applicable | None published |
| Local income tax | No | Yes |
| Revenue department | Texas Comptroller of Public Accounts | Indiana Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Indiana and working in Texas 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: Texas → IndianaWork state only
- 1099 contractor: Texas → IndianaClient state only, if you work there
- Moved mid-year: Texas → IndianaOne part-year return — the state you moved to
Other Texas pairs
Questions people actually ask
I live in Texas and work remotely for a Indiana employer. Which state do I pay?
This is the best case in the whole matrix. Living in a no-income-tax state and working remotely for an employer in Indiana — a state with no convenience rule — means no state withholding and no state return anywhere. Check that your employer is not withholding Indiana tax by mistake.
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 Texas or Indiana is an error worth querying.
Does my Indiana employer's location alone create a Indiana tax obligation?
No. Indiana 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 Indiana are a different matter — those are Indiana-source income and can require a nonresident return.
How current is this?
The Texas and Indiana rules on this page were last checked against Texas Comptroller of Public Accounts and Indiana 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.
- Texas Comptroller of Public Accounts — individual income taxaccessed 2026-08-07
- Indiana Department of Revenue — individual income taxaccessed 2026-08-07