Live in Vermont, Work in Tennessee: Which State Taxes Your Paycheck?
Answer
Vermont taxes the income and Tennessee cannot. Residency, not the location of the job, drives this answer: Vermont reaches all of a resident's income, and Tennessee has no personal income tax to apply to the part earned inside its borders.
Last verified
Crossing into a state with no income tax does not lower your tax bill, because your home state is not taxing you on where you work — it is taxing you on where you live. Vermont reaches all of a resident's income, and Tennessee adds nothing on top.
What you file
- 1Resident return · Vermont
File a Vermont resident return reporting all of your income.
The two states, side by side
| Vermont | Tennessee | |
|---|---|---|
| Taxes wages | Yes — graduated | No |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Form IN-111 with Schedule IN-113 | Not applicable |
| Credit for other-state tax | Schedule IN-117 | No income tax |
| Nonresident safe harbour | None published | Not applicable |
| Local income tax | No | No |
| Revenue department | Vermont Department of Taxes | Tennessee Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Tennessee and working in Vermont 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: Vermont → TennesseeHome state only
- 1099 contractor: Vermont → TennesseeHome state only — estimated payments
- Moved mid-year: Vermont → TennesseeOne part-year return — the state you left
Other Vermont pairs
Questions people actually ask
I live in Vermont and work in Tennessee. Which state takes the tax out of my paycheck?
Vermont taxes the income and Tennessee cannot. Residency, not the location of the job, drives this answer: Vermont reaches all of a resident's income, and Tennessee has no personal income tax to apply to the part earned inside its borders.
Which state should my employer be withholding for?
Vermont. Your employer should withhold Vermont 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 Vermont and Tennessee rules on this page were last checked against Vermont Department of Taxes 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.
- Vermont Department of Taxes — individual income taxaccessed 2026-08-07
- Tennessee Department of Revenue — individual income taxaccessed 2026-08-07