Live in Texas, Work in Iowa: Which State Taxes Your Paycheck?
Answer
One return, filed in Iowa. Your employer withholds Iowa tax on the wages you earn there and you settle up on a Iowa nonresident return. Texas does not tax wages, so this pair produces a single state filing rather than two.
Last verified
Living in a state with no income tax removes the resident return, but it does not shelter income you earn somewhere else. Iowa taxes what is earned inside Iowa, whoever earns it, and a nonresident return is how that gets settled.
Iowa also has a layer below the state one, and it is the layer that survives every agreement: Many Iowa school districts levy a surtax calculated as a percentage of state income tax. It is reported on the state return rather than separately.
What you file
- 1Nonresident return · IowaForm IA 1040 with Schedule IA 126
File a Iowa nonresident return for the wages you earned in Iowa. Texas has no wage income tax, so there is no second return and no credit to claim.
The two states, side by side
| Texas | Iowa | |
|---|---|---|
| Taxes wages | No | Yes — flat |
| Reciprocity partners | None | 1 (Form 44-016) |
| Convenience rule | No | No |
| Nonresident return | Not applicable | Form IA 1040 with Schedule IA 126 |
| Credit for other-state tax | No income tax | Form IA 130 |
| Nonresident safe harbour | Not applicable | None published |
| Local income tax | No | Yes |
| Revenue department | Texas Comptroller of Public Accounts | Iowa Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Iowa 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 → IowaNo state income tax on your wages
- 1099 contractor: Texas → IowaClient state only, if you work there
- Moved mid-year: Texas → IowaOne part-year return — the state you moved to
Other Texas pairs
Questions people actually ask
I live in Texas and work in Iowa. Which state takes the tax out of my paycheck?
One return, filed in Iowa. Your employer withholds Iowa tax on the wages you earn there and you settle up on a Iowa 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?
Iowa. The wages are sourced to Iowa, so Iowa 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 Iowa rules on this page were last checked against Texas Comptroller of Public Accounts and Iowa 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.
- Texas Comptroller of Public Accounts — individual income taxaccessed 2026-08-07
- Iowa Department of Revenue — individual income taxaccessed 2026-08-07