Live in Virginia, Work in North Dakota: Which State Taxes Your Paycheck?
Answer
Two returns, one credit. North Dakota has the first claim on wages earned inside the state and withholds accordingly. Virginia then taxes you as a resident on everything and gives credit for what North Dakota already took, capped at what Virginia would have charged on that same income.
Last verified
Two states can lawfully tax the same wages: North Dakota because the work happened there, Virginia because you live there. Nothing prevents the overlap in advance — it is unwound afterwards, on the Virginia return, through the credit for taxes paid to another state.
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 · North DakotaForm ND-1 with Schedule ND-1NR
File the North Dakota nonresident return FIRST — you need the North Dakota 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 North Dakota. The credit is capped at what Virginia would have charged on that same income, so if North Dakota taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Virginia | North Dakota | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | 5 (Form VA-4) | 2 (Form NDW-R) |
| Convenience rule | No | No |
| Nonresident return | Form 763 | Form ND-1 with Schedule ND-1NR |
| Credit for other-state tax | Schedule OSC | Schedule ND-1CR |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | No |
| Revenue department | Virginia Department of Taxation | North Dakota Office of State Tax Commissioner |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in North Dakota 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 → North DakotaHome state only
- 1099 contractor: Virginia → North DakotaHome state, plus the client state if you work there
- Moved mid-year: Virginia → North DakotaTwo part-year returns
Other Virginia pairs
Questions people actually ask
I live in Virginia and work in North Dakota. Which state takes the tax out of my paycheck?
Two returns, one credit. North Dakota has the first claim on wages earned inside the state and withholds accordingly. Virginia then taxes you as a resident on everything and gives credit for what North Dakota already took, capped at what Virginia would have charged on that same income.
Which state should my employer be withholding for?
North Dakota. The wages are sourced to North Dakota, so North Dakota 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 North Dakota on the same income, claimed on Schedule OSC. The credit is capped at the Virginia tax on that income, so if North Dakota taxes it more heavily the excess is not refunded by either state.
How current is this?
The Virginia and North Dakota rules on this page were last checked against Virginia Department of Taxation and North Dakota Office of State Tax Commissioner 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
- North Dakota Office of State Tax Commissioner — individual income taxaccessed 2026-08-07