Does California Tax Income Earned in Other States?

Yes, California taxes income earned from ALL state sources.

If you’re a California resident, you’re no stranger to high tax rates. In fact, you pay the highest income tax in the country!

Here’s another fact: if you earned income working in another state, you’ll still be forced to pay the same, high California tax rate, even if that other state has a lower tax rate.

According to, California residents  are “taxed on ALL income, including income from sources outside California.”

What About Income From a Non-Income Tax State?

If you earned income in one of the seven states that doesn’t assess income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming), or one of the two states that have no tax on wages (Tennessee and New Hampshire), you’re still required to pay tax on that income to the state of California.

So, let’s say you work remotely from your home in San Diego for a company located in Texas. When filing, you’ll report this income on your California tax return. You’ll also pay a chunk of CA tax on it.

The one piece of good news is that you won’t need to file a non-resident tax return to the tax-free state. You’ll only be required to file a resident return to California.

How Do I Report the Income I Earned?

If you’re a California resident, you’ll need to file a California resident tax return and report ALL the income you earned during 2014, regardless of the state you earned it in.

You’ll also need to file a non-resident tax return for the state you earned the non-California income in and pay tax on the income earned in that state. California does not have any reciprocal agreements with any other states regarding taxes. This means you have to file state tax returns for both states unless it’s an income tax-free state.

For example, if you had two jobs in 2014, one in Santa Barbara and the other in Phoenix, AZ, you’ll report the amount you earned from your job in Phoenix on a non-resident Arizona tax return and the earnings from both jobs on your California resident return.

Is there an easy way to file my multi-state taxes?

Yes! In fact, you won’t have to bother searching for and filling out multiple tax returns. With Rapidtax, you’ll only need to enter your income information once and we’ll do the rest of the work for you.

While you’re at it, you can get your federal tax return out of the way too! To get started, create an account on RapidTax and enter your tax information.

If you have questions along the way, don’t hesitate to reach out to the RapidTax team.

File Your Taxes Today

21 Replies to “Does California Tax Income Earned in Other States?”

  1. I have an employee who lived and worked in Texas. He terminated the company and moved to California. Now he is owed a PTO payout. Do I need to tax him for the PTO in California, even though he earned this money while working and living in Texas?

  2. My client is a resident of Arizona and earns 48% percent of his 1099 income in CA. If I file a non-resident CA return and claim 48% of the total income on the CA return do I get 100% of the Az tax credit on the CA return??
    Thanks for any help!

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