Live in Massachusetts, Work in Alabama: Which State Taxes Your Paycheck?
Answer
You file twice: Alabama first, then Massachusetts. There is no reciprocity agreement between these two states, so Alabama taxes the income where it was earned and Massachusetts taxes it again as resident income — with the resident credit removing the double charge rather than an exemption form preventing it.
Last verified
Two states can lawfully tax the same wages: Alabama because the work happened there, Massachusetts because you live there. Nothing prevents the overlap in advance — it is unwound afterwards, on the Massachusetts return, through the credit for taxes paid to another state.
A Massachusetts resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule OJC. The credit is capped at the Massachusetts tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
Alabama also has a layer below the state one, and it is the layer that survives every agreement: Several Alabama municipalities levy an occupational licence fee on wages earned inside the city — Birmingham is the largest. It is collected by the city, not the Department of Revenue, and no state agreement or credit covers it.
What you file
- 1Nonresident return · AlabamaForm 40NR
File the Alabama nonresident return FIRST — you need the Alabama tax figure before you can complete Massachusetts.
- 2Resident return · MassachusettsSchedule OJC
File a Massachusetts resident return reporting all income, then claim the credit for tax paid to Alabama. The credit is capped at what Massachusetts would have charged on that same income, so if Alabama taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Massachusetts | Alabama | |
|---|---|---|
| Taxes wages | Yes — flat | Yes — graduated |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Form 1-NR/PY | Form 40NR |
| Credit for other-state tax | Schedule OJC | Schedule CR |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | Yes |
| Revenue department | Massachusetts Department of Revenue | Alabama Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Alabama and working in Massachusetts 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: Massachusetts → AlabamaHome state only
- 1099 contractor: Massachusetts → AlabamaHome state, plus the client state if you work there
- Moved mid-year: Massachusetts → AlabamaTwo part-year returns
Other Massachusetts pairs
Questions people actually ask
I live in Massachusetts and work in Alabama. Which state takes the tax out of my paycheck?
You file twice: Alabama first, then Massachusetts. There is no reciprocity agreement between these two states, so Alabama taxes the income where it was earned and Massachusetts taxes it again as resident income — with the resident credit removing the double charge rather than an exemption form preventing it.
Which state should my employer be withholding for?
Alabama. The wages are sourced to Alabama, so Alabama withholding is correct and there is no Massachusetts 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. Massachusetts gives residents a credit for tax paid to Alabama on the same income, claimed on Schedule OJC. The credit is capped at the Massachusetts tax on that income, so if Alabama taxes it more heavily the excess is not refunded by either state.
How current is this?
The Massachusetts and Alabama rules on this page were last checked against Massachusetts Department of Revenue and Alabama 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.
- Massachusetts Department of Revenue — individual income taxaccessed 2026-08-07
- Alabama Department of Revenue — individual income taxaccessed 2026-08-07