Live in Vermont, Work Remotely for a Minnesota Employer: Who Taxes You?
Answer
One state, one return: Vermont. Minnesota has no wage income tax, so working there changes nothing about what you owe. Your Vermont resident return reports the Minnesota income along with everything else, and there is no credit to claim because Minnesota charged you nothing.
Last verified
The instinct that working in a no-tax state means paying no tax is the single most expensive misunderstanding in this niche. Minnesota takes nothing, but Vermont still taxes residents on income earned anywhere, so the full amount lands on your Vermont return.
What you file
- 1Resident return · Vermont
File a Vermont resident return reporting all of your income.
The two states, side by side
| Vermont | Minnesota | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | None | 2 (Form MWR) |
| Convenience rule | No | No |
| Nonresident return | Form IN-111 with Schedule IN-113 | Form M1 with Schedule M1NR |
| Credit for other-state tax | Schedule IN-117 | Schedule M1CR |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | No |
| Revenue department | Vermont Department of Taxes | Minnesota Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Minnesota and working in Vermont 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: Vermont → MinnesotaBoth states — credit offsets the double tax
- 1099 contractor: Vermont → MinnesotaHome state, plus the client state if you work there
- Moved mid-year: Vermont → MinnesotaTwo part-year returns
Other Vermont pairs
Questions people actually ask
I live in Vermont and work remotely for a Minnesota employer. Which state do I pay?
One state, one return: Vermont. Minnesota has no wage income tax, so working there changes nothing about what you owe. Your Vermont resident return reports the Minnesota income along with everything else, and there is no credit to claim because Minnesota charged you nothing.
Which state should my employer be withholding for?
Vermont. Your employer should withhold Vermont tax rather than Minnesota tax on these wages. If a Minnesota line is showing on your pay stub, raise it with payroll now rather than at filing time.
Does my Minnesota employer's location alone create a Minnesota tax obligation?
No. Minnesota 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 Minnesota are a different matter — those are Minnesota-source income and can require a nonresident return.
How current is this?
The Vermont and Minnesota rules on this page were last checked against Vermont Department of Taxes and Minnesota 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.
- Vermont Department of Taxes — individual income taxaccessed 2026-08-07
- Minnesota Department of Revenue — individual income taxaccessed 2026-08-07