Live in Virginia, Work in Hawaii: Which State Taxes Your Paycheck?
Answer
Hawaii withholds and Virginia credits. Without an agreement between them, both states are entitled to tax income earned in Hawaii by a Virginia resident. The mechanism that stops you paying twice is the credit on the Virginia resident return, which is why the Hawaii return has to be completed first.
Last verified
Without an agreement between Virginia and Hawaii, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the Hawaii figure is an input to the Virginia return, so completing Virginia first means doing it twice.
A Virginia resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule OSC. The credit is capped at the Virginia tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
What you file
- 1Nonresident return · HawaiiForm N-15
File the Hawaii nonresident return FIRST — you need the Hawaii tax figure before you can complete Virginia.
- 2Resident return · VirginiaSchedule OSC
File a Virginia resident return reporting all income, then claim the credit for tax paid to Hawaii. The credit is capped at what Virginia would have charged on that same income, so if Hawaii taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Virginia | Hawaii | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | 5 (Form VA-4) | None |
| Convenience rule | No | No |
| Nonresident return | Form 763 | Form N-15 |
| Credit for other-state tax | Schedule OSC | Schedule CR |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | No |
| Revenue department | Virginia Department of Taxation | Hawaii Department of Taxation |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Hawaii and working in Virginia 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: Virginia → HawaiiHome state only
- 1099 contractor: Virginia → HawaiiHome state, plus the client state if you work there
- Moved mid-year: Virginia → HawaiiTwo part-year returns
Other Virginia pairs
Questions people actually ask
I live in Virginia and work in Hawaii. Which state takes the tax out of my paycheck?
Hawaii withholds and Virginia credits. Without an agreement between them, both states are entitled to tax income earned in Hawaii by a Virginia resident. The mechanism that stops you paying twice is the credit on the Virginia resident return, which is why the Hawaii return has to be completed first.
Which state should my employer be withholding for?
Hawaii. The wages are sourced to Hawaii, so Hawaii withholding is correct and there is no Virginia 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. Virginia gives residents a credit for tax paid to Hawaii on the same income, claimed on Schedule OSC. The credit is capped at the Virginia tax on that income, so if Hawaii taxes it more heavily the excess is not refunded by either state.
How current is this?
The Virginia and Hawaii rules on this page were last checked against Virginia Department of Taxation and Hawaii Department of Taxation 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.
- Virginia Department of Taxation — individual income taxaccessed 2026-08-07
- Virginia — Form VA-4accessed 2026-08-07
- Virginia Tax — Reciprocityaccessed 2026-08-07
- Hawaii Department of Taxation — individual income taxaccessed 2026-08-07