Live in Hawaii, Work in Vermont: Which State Taxes Your Paycheck?
Answer
Vermont withholds and Hawaii credits. Without an agreement between them, both states are entitled to tax income earned in Vermont by a Hawaii resident. The mechanism that stops you paying twice is the credit on the Hawaii resident return, which is why the Vermont return has to be completed first.
Last verified
Without an agreement between Hawaii and Vermont, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the Vermont figure is an input to the Hawaii return, so completing Hawaii first means doing it twice.
A Hawaii resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule CR. The credit is capped at the Hawaii tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
What you file
- 1Nonresident return · VermontForm IN-111 with Schedule IN-113
File the Vermont nonresident return FIRST — you need the Vermont tax figure before you can complete Hawaii.
- 2Resident return · HawaiiSchedule CR
File a Hawaii resident return reporting all income, then claim the credit for tax paid to Vermont. The credit is capped at what Hawaii would have charged on that same income, so if Vermont taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Hawaii | Vermont | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Form N-15 | Form IN-111 with Schedule IN-113 |
| Credit for other-state tax | Schedule CR | Schedule IN-117 |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | No |
| Revenue department | Hawaii Department of Taxation | Vermont Department of Taxes |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Vermont and working in Hawaii gives:Both states — credit offsets the double tax.
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.
- Remote worker: Hawaii → VermontHome state only
- 1099 contractor: Hawaii → VermontHome state, plus the client state if you work there
- Moved mid-year: Hawaii → VermontTwo part-year returns
Other Hawaii pairs
Questions people actually ask
I live in Hawaii and work in Vermont. Which state takes the tax out of my paycheck?
Vermont withholds and Hawaii credits. Without an agreement between them, both states are entitled to tax income earned in Vermont by a Hawaii resident. The mechanism that stops you paying twice is the credit on the Hawaii resident return, which is why the Vermont return has to be completed first.
Which state should my employer be withholding for?
Vermont. The wages are sourced to Vermont, so Vermont withholding is correct and there is no Hawaii withholding to set up.
Will I end up paying tax twice on the same income?
Not twice over, but you will pay the higher of the two rates. Hawaii gives residents a credit for tax paid to Vermont on the same income, claimed on Schedule CR. The credit is capped at the Hawaii tax on that income, so if Vermont taxes it more heavily the excess is not refunded by either state.
How current is this?
The Hawaii and Vermont rules on this page were last checked against Hawaii Department of Taxation and Vermont Department of Taxes 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.
- Hawaii Department of Taxation — individual income taxaccessed 2026-08-07
- Vermont Department of Taxes — individual income taxaccessed 2026-08-07