Live in Texas, Work in Colorado: Which State Taxes Your Paycheck?
Answer
One return, filed in Colorado. Your employer withholds Colorado tax on the wages you earn there and you settle up on a Colorado nonresident return. Texas does not tax wages, so this pair produces a single state filing rather than two.
Last verified
This is the mirror image of the more common commute. There is no home-state return to file, so the Colorado nonresident return carries the whole obligation — and because Texas charges nothing, there is no credit mechanism involved anywhere.
Colorado also has a layer below the state one, and it is the layer that survives every agreement: A few Colorado cities levy an occupational privilege tax — a flat monthly head charge on anyone working in the city, not a percentage of income. It is not an income tax and no credit offsets it.
What you file
- 1Nonresident return · ColoradoForm DR 0104 with Schedule DR 0104PN
File a Colorado nonresident return for the wages you earned in Colorado. Texas has no wage income tax, so there is no second return and no credit to claim.
The two states, side by side
| Texas | Colorado | |
|---|---|---|
| Taxes wages | No | Yes — flat |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Not applicable | Form DR 0104 with Schedule DR 0104PN |
| Credit for other-state tax | No income tax | Form DR 0104CR |
| Nonresident safe harbour | Not applicable | None published |
| Local income tax | No | Yes |
| Revenue department | Texas Comptroller of Public Accounts | Colorado Department of Revenue — Taxation Division |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Colorado and working in Texas 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.
- Remote worker: Texas → ColoradoNo state income tax on your wages
- 1099 contractor: Texas → ColoradoClient state only, if you work there
- Moved mid-year: Texas → ColoradoOne part-year return — the state you moved to
Other Texas pairs
Questions people actually ask
I live in Texas and work in Colorado. Which state takes the tax out of my paycheck?
One return, filed in Colorado. Your employer withholds Colorado tax on the wages you earn there and you settle up on a Colorado nonresident return. Texas does not tax wages, so this pair produces a single state filing rather than two.
Which state should my employer be withholding for?
Colorado. The wages are sourced to Colorado, so Colorado withholding is correct and there is no Texas withholding to set up, because Texas levies no income tax on wages.
How current is this?
The Texas and Colorado rules on this page were last checked against Texas Comptroller of Public Accounts and Colorado Department of Revenue — Taxation Division 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.
- Texas Comptroller of Public Accounts — individual income taxaccessed 2026-08-07
- Colorado Department of Revenue — Taxation Division — individual income taxaccessed 2026-08-07