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Live in Indiana, Work in Massachusetts: Which State Taxes Your Paycheck?

Both states — credit offsets the double taxMassachusetts withholds

Answer

Expect withholding in Massachusetts and a return in both. Indiana and Massachusetts hold no reciprocal agreement, so the overlap is resolved after the fact: Massachusetts taxes the Massachusetts-source wages, and your Indiana resident return claims a credit for that tax against the Indiana liability on the same income.

Last verified

Without an agreement between Indiana and Massachusetts, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the Massachusetts figure is an input to the Indiana return, so completing Indiana first means doing it twice.

A Indiana resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule 6 (Form IT-40PNR). The credit is capped at the Indiana tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.

What you file

  1. 1Nonresident return · MassachusettsForm 1-NR/PY

    File the Massachusetts nonresident return FIRST — you need the Massachusetts tax figure before you can complete Indiana.

  2. 2Resident return · IndianaSchedule 6 (Form IT-40PNR)

    File a Indiana resident return reporting all income, then claim the credit for tax paid to Massachusetts. The credit is capped at what Indiana would have charged on that same income, so if Massachusetts taxes it at a higher rate the difference is not refunded.

The two states, side by side

 IndianaMassachusetts
Taxes wagesYes — flatYes — flat
Reciprocity partners5 (Form WH-47)None
Convenience ruleNoNo
Nonresident returnForm IT-40PNRForm 1-NR/PY
Credit for other-state taxSchedule 6 (Form IT-40PNR)Schedule OJC
Nonresident safe harbourNone publishedNone published
Local income taxYesNo
Revenue departmentIndiana Department of RevenueMassachusetts Department of Revenue
Last verified

The other direction

Reversing the commute does not always reverse the answer. Living in Massachusetts and working in Indiana gives:Both states — credit offsets the double tax.

Massachusetts to Indiana →

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.

Other Indiana pairs

Questions people actually ask

I live in Indiana and work in Massachusetts. Which state takes the tax out of my paycheck?

Expect withholding in Massachusetts and a return in both. Indiana and Massachusetts hold no reciprocal agreement, so the overlap is resolved after the fact: Massachusetts taxes the Massachusetts-source wages, and your Indiana resident return claims a credit for that tax against the Indiana liability on the same income.

Which state should my employer be withholding for?

Massachusetts. The wages are sourced to Massachusetts, so Massachusetts withholding is correct and there is no Indiana 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. Indiana gives residents a credit for tax paid to Massachusetts on the same income, claimed on Schedule 6 (Form IT-40PNR). The credit is capped at the Indiana tax on that income, so if Massachusetts taxes it more heavily the excess is not refunded by either state.

How current is this?

The Indiana and Massachusetts rules on this page were last checked against Indiana Department of Revenue and Massachusetts 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.