Live in West Virginia, Work in Alabama: Which State Taxes Your Paycheck?
Answer
You file twice: Alabama first, then West Virginia. There is no reciprocity agreement between these two states, so Alabama taxes the income where it was earned and West Virginia taxes it again as resident income — with the resident credit removing the double charge rather than an exemption form preventing it.
Last verified
Without an agreement between West Virginia and Alabama, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the Alabama figure is an input to the West Virginia return, so completing West Virginia first means doing it twice.
A West Virginia resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule E (Form IT-140). The credit is capped at the West Virginia tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
Alabama also has a layer below the state one, and it is the layer that survives every agreement: Several Alabama municipalities levy an occupational licence fee on wages earned inside the city — Birmingham is the largest. It is collected by the city, not the Department of Revenue, and no state agreement or credit covers it.
What you file
- 1Nonresident return · AlabamaForm 40NR
File the Alabama nonresident return FIRST — you need the Alabama tax figure before you can complete West Virginia.
- 2Resident return · West VirginiaSchedule E (Form IT-140)
File a West Virginia resident return reporting all income, then claim the credit for tax paid to Alabama. The credit is capped at what West Virginia would have charged on that same income, so if Alabama taxes it at a higher rate the difference is not refunded.
The two states, side by side
| West Virginia | Alabama | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | 5 (Form WV/IT-104) | None |
| Convenience rule | No | No |
| Nonresident return | Form IT-140 with Schedule A | Form 40NR |
| Credit for other-state tax | Schedule E (Form IT-140) | Schedule CR |
| Nonresident safe harbour | None published | None published |
| Local income tax | Yes | Yes |
| Revenue department | West Virginia Tax Division | Alabama Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Alabama and working in West 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: West Virginia → AlabamaHome state only
- 1099 contractor: West Virginia → AlabamaHome state, plus the client state if you work there
- Moved mid-year: West Virginia → AlabamaTwo part-year returns
Other West Virginia pairs
Questions people actually ask
I live in West Virginia and work in Alabama. Which state takes the tax out of my paycheck?
You file twice: Alabama first, then West Virginia. There is no reciprocity agreement between these two states, so Alabama taxes the income where it was earned and West Virginia taxes it again as resident income — with the resident credit removing the double charge rather than an exemption form preventing it.
Which state should my employer be withholding for?
Alabama. The wages are sourced to Alabama, so Alabama withholding is correct and there is no West 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. West Virginia gives residents a credit for tax paid to Alabama on the same income, claimed on Schedule E (Form IT-140). The credit is capped at the West Virginia tax on that income, so if Alabama taxes it more heavily the excess is not refunded by either state.
How current is this?
The West Virginia and Alabama rules on this page were last checked against West Virginia Tax Division and Alabama 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.
- West Virginia Tax Division — individual income taxaccessed 2026-08-07
- Alabama Department of Revenue — individual income taxaccessed 2026-08-07