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Live in Wisconsin, Work in Iowa: Which State Taxes Your Paycheck?

Both states — credit offsets the double taxIowa withholds

Answer

Expect withholding in Iowa and a return in both. Wisconsin and Iowa hold no reciprocal agreement, so the overlap is resolved after the fact: Iowa taxes the Iowa-source wages, and your Wisconsin resident return claims a credit for that tax against the Wisconsin liability on the same income.

Last verified

Two states can lawfully tax the same wages: Iowa because the work happened there, Wisconsin because you live there. Nothing prevents the overlap in advance — it is unwound afterwards, on the Wisconsin return, through the credit for taxes paid to another state.

A Wisconsin resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule OS. The credit is capped at the Wisconsin tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.

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

  1. 1Nonresident return · IowaForm IA 1040 with Schedule IA 126

    File the Iowa nonresident return FIRST — you need the Iowa tax figure before you can complete Wisconsin.

  2. 2Resident return · WisconsinSchedule OS

    File a Wisconsin resident return reporting all income, then claim the credit for tax paid to Iowa. The credit is capped at what Wisconsin would have charged on that same income, so if Iowa taxes it at a higher rate the difference is not refunded.

The two states, side by side

 WisconsinIowa
Taxes wagesYes — graduatedYes — flat
Reciprocity partners4 (Form W-220)1 (Form 44-016)
Convenience ruleNoNo
Nonresident returnForm 1NPRForm IA 1040 with Schedule IA 126
Credit for other-state taxSchedule OSForm IA 130
Nonresident safe harbourDollar floor publishedNone published
Local income taxNoYes
Revenue departmentWisconsin Department of RevenueIowa Department of Revenue
Last verified

The other direction

Reversing the commute does not always reverse the answer. Living in Iowa and working in Wisconsin gives:Both states — credit offsets the double tax.

Iowa to Wisconsin →

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.

Other Wisconsin pairs

Questions people actually ask

I live in Wisconsin and work in Iowa. Which state takes the tax out of my paycheck?

Expect withholding in Iowa and a return in both. Wisconsin and Iowa hold no reciprocal agreement, so the overlap is resolved after the fact: Iowa taxes the Iowa-source wages, and your Wisconsin resident return claims a credit for that tax against the Wisconsin liability on the same income.

Which state should my employer be withholding for?

Iowa. The wages are sourced to Iowa, so Iowa withholding is correct and there is no Wisconsin 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. Wisconsin gives residents a credit for tax paid to Iowa on the same income, claimed on Schedule OS. The credit is capped at the Wisconsin tax on that income, so if Iowa taxes it more heavily the excess is not refunded by either state.

How current is this?

The Wisconsin and Iowa rules on this page were last checked against Wisconsin Department of Revenue 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.