Live in Indiana, Work in Tennessee: Which State Taxes Your Paycheck?
Answer
One state, one return: Indiana. Tennessee has no wage income tax, so working there changes nothing about what you owe. Your Indiana resident return reports the Tennessee income along with everything else, and there is no credit to claim because Tennessee 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. Tennessee takes nothing, but Indiana still taxes residents on income earned anywhere, so the full amount lands on your Indiana return.
What you file
- 1Resident return · Indiana
File a Indiana resident return reporting all of your income.
The two states, side by side
| Indiana | Tennessee | |
|---|---|---|
| Taxes wages | Yes — flat | No |
| Reciprocity partners | 5 (Form WH-47) | None |
| Convenience rule | No | No |
| Nonresident return | Form IT-40PNR | Not applicable |
| Credit for other-state tax | Schedule 6 (Form IT-40PNR) | No income tax |
| Nonresident safe harbour | None published | Not applicable |
| Local income tax | Yes | No |
| Revenue department | Indiana Department of Revenue | Tennessee Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Tennessee and working in Indiana gives:Work 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.
- Remote worker: Indiana → TennesseeHome state only
- 1099 contractor: Indiana → TennesseeHome state only — estimated payments
- Moved mid-year: Indiana → TennesseeOne part-year return — the state you left
Other Indiana pairs
Questions people actually ask
I live in Indiana and work in Tennessee. Which state takes the tax out of my paycheck?
One state, one return: Indiana. Tennessee has no wage income tax, so working there changes nothing about what you owe. Your Indiana resident return reports the Tennessee income along with everything else, and there is no credit to claim because Tennessee charged you nothing.
Which state should my employer be withholding for?
Indiana. Your employer should withhold Indiana tax rather than Tennessee tax on these wages. If a Tennessee line is showing on your pay stub, raise it with payroll now rather than at filing time.
How current is this?
The Indiana and Tennessee rules on this page were last checked against Indiana Department of Revenue and Tennessee 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.
- Indiana Department of Revenue — individual income taxaccessed 2026-08-07
- Tennessee Department of Revenue — individual income taxaccessed 2026-08-07