Most of us would agree with the following statement: Employee wages are taxed federally and at the state level. But this isn’t always the case. Some employees can state income tax exemption.
We all know that taxes can be complicated. This guide will cover everything you need to know about claiming tax exemptions on state income tax withholding (plus, there’s an easy-to-read chart!).
Understanding tax-exempt status
Some employees can claim tax exemption from federal and state income taxes. If an employee claims tax-exempt status from federal income tax, don’t withhold any federal income taxes from their wages. Likewise, don’t withhold state income taxes from an employee’s wages if they claim tax-exempt from state income taxes.
There are several reasons an employee may qualify for tax-exempt status. Some of these tax exemptions include situations when the employee:
- Had no tax liability for the previous and current year
- Is a military spouse or military servicemember
- Is Native American
- Lives and works in different states with a reciprocal agreement
An employee who qualifies for both federal and state income tax exemption must fill out the federal W-4 form and the appropriate state income tax exemption form.
Employees must provide their name, Social Security number, address, and why they qualify for state tax exemption on the appropriate forms.
Remember that claiming tax-exempt is not the same as claiming tax exemptions or allowances. Some states let employees claim exemptions or allowances to lower their state income tax withholding. Claiming tax-exempt from state income tax withholding means that the employee won’t pay income tax in a specific state as long as they qualify for the exemption.
Federal tax exemption
Before we go over state income tax exemptions by state, let’s cover federal tax exemption. Employees eligible for federal income tax exemption can do so on the federal Form W-4.
An employee may qualify for federal tax exemption if they:
- Have had no tax liability for the previous year
- Expect to have no tax liability for the current year
Federal tax exemption is only valid during the calendar year it’s given to the employee. To continue exempt status for the next year, an employee must give you a new Form W-4 by February 15. If February 15 falls on a Saturday, Sunday, or legal holiday, employees must provide the new Form W-4 on the next business day.
State income tax exemption by state
To offer tax-exempt status to employees, a state must first have state income tax withholding. Most states do. But, nine states have no state income tax. Keep in mind that employees in states without state income tax withholding can still apply for tax-exempt status at the federal level. For those states with state income tax, employees have state-specific processes they must complete to claim tax-exempt status.
Careful! The different requirements and steps for filing a claim can get complicated quickly.
Use our state-by-state guide to learn:
- Who qualifies for tax-exempt status
- The proper state tax exemption form(s)
- Your responsibilities as an employer
Remember that, depending on your state and the reason for tax exemption, you may need to collect additional documents (e.g., spousal ID cards and Leave and Earnings Statements) from employees.
After an employee completes the state income tax exemption form, they must submit it to you with the proper documentation and related materials. Retain a copy of this document for your employee’s personnel records.
To maintain their tax-exempt status, employees must submit new forms each year.
Alabama
One type of employee in Alabama may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
Alabama employees can claim tax-exempt status if they are nonresident military spouses.
What forms do you need to collect from employees?
Employees who want to claim exempt from Alabama income tax must use the following form:
- Form A4-MS, Employee’s Withholding Exemption Certificate. Employees must complete the appropriate lines on this form to claim tax-exempt status as nonresident military spouses.
Alaska
Alaska does not have a state income tax.
Arizona
Three types of employees in Arizona may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Arizona income tax withheld from their wages:
- Native Americans
- Nonresident military spouses
- Nonresidents who live in a state with a reciprocal agreement
What forms do you need to collect from employees?
Employees who want to claim exempt from Arizona income tax must use the following form:
- Form WEC, Employee Withholding Exemption Certificate. Employees can use this form to claim any of the state tax exemptions. Employees must check the appropriate boxes designating why they should be exempt from income tax withholding.
Arkansas
Three types of employees in Arkansas may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Arkansas income tax withheld from their wages:
- Employees with a qualifying gross income for their filing status
- Military servicemembers
- Nonresident military spouses
What forms do you need to collect from employees?
Employees that want to claim exempt from Arkansas income tax must use one of the following forms:
- Form AR4ECSP, Employee’s Special Withholding Exemption Certificate. Employees who want to claim tax-exempt status based on their income level can use this form.
- Form AR4MEC, Military Employee’s Withholding Exemption Certificate. Active U.S. military servicemembers can claim tax-exempt for Arkansas income tax withholding by filing this form.
- Form ARW-4MS, Annual Withholding Tax Exemption Certificate For Military Spouse. Military spouses who want to claim tax-exempt status can use this form.
California
Three two types of employees in California may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no California income tax withheld from their wages:
- Employees with no tax liability last year and none expected in the current year
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from California income tax must use the following form:
- Form DE-4, Employee’s Withholding Allowance Certificate. Employees can use this form to claim either tax-exempt status mentioned above. Employees must check the appropriate boxes designating why they should be exempt from income tax withholding.
Colorado
One type of employee in Colorado may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
Colorado employees can claim tax-exempt status if they are nonresident military spouses.
What forms do you need to collect from employees?
Employees who want to claim exempt from Colorado income tax must use the following form:
- Form DR1059, Affidavit of Exemption for the Nonresident Spouse of a U.S. Servicemember. Military spouses that want to claim tax-exempt status on their Colorado income tax can use this form.
Connecticut
One type of employee in Connecticut may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
Connecticut employees can claim tax-exempt status if they are nonresident military spouses.
What forms do you need to collect from employees?
Employees who want to claim exempt from Connecticut income tax must use the following form:
- Form CT-W4, Employee’s Withholding Certificate. Military spouses who want to claim tax-exempt status on their Connecticut income tax can use this form. Employees must check the appropriate boxes designating why they should be exempt from income tax withholding.
Delaware
One type of employee in Delaware may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
Delaware employees can claim tax-exempt status if they are the spouse of a U.S. servicemember.
What forms do you need to collect from employees?
Employees that want to claim exempt from Delaware income tax must use the following form:
- Form W-4DE, Annual Withholding Tax Exemption Certification for Military Spouse. Military spouses who want to claim tax-exempt status on their Delaware income tax can use this form. To start or terminate their exemption, employees must check the appropriate box.
Florida
Florida does not have a state income tax.
Georgia
Two types of employees in Georgia may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Georgia income tax withheld from their wages:
- Employees with no tax liability last year and none expected in the current year
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from Georgia income tax must use the following form:
- Form G-4, State of Georgia Employee’s Withholding Allowance Certificate. Employees who want to claim either of the above tax exemptions must use this form. Employees can skip lines 3 through 7 and check the appropriate box on line 8.
Hawaii
One type of employee in Hawaii may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
Hawaii employees can claim tax-exempt status if they are nonresident employees.
What forms do you need to collect from employees?
Employees who want to claim exempt from Hawaii income tax must use the following form:
- Form HW-6, Employee’s Statement to Employer Concerning Nonresidence in the State of Hawaii. Nonresident employees can use this form to claim exempt from Hawaii income tax. Employees qualify as nonresident employees if they work in Hawaii for less than 60 days and are paid from an office outside Hawaii. To claim exempt status, employees must answer 28 “Yes or No” questions and handwrite answers when applicable.
Keep in mind there is an exception to this rule. You cannot withhold income tax on nonresident employees’ wages if they work on a construction project in Hawaii for a contractor.
Idaho
Three types of employees in Idaho may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Idaho income tax withheld from their wages:
- Employees with a qualifying gross income for their filing status
- Nonresident aliens
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from Idaho income tax must use the following forms:
- Form ID W-4, Employee’s Withholding Allowance Certificate. If employees want to claim an exemption because of their gross income or because they are nonresident aliens, they must file this form. To claim either exemption, employees must write “Exempt” on line 1.
- Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. Nonresident aliens with income that is exempt because of a treaty must complete Form 8233 in addition to Form ID W-4.
- Form ID-MS1, Employee’s Idaho Military Spouse Withholding Exemption Certificate. Employees must use this form and ID W-4 if they want to claim tax-exempt status because they are married to a U.S. military servicemember.
Illinois
Three types of employees in Illinois may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Illinois income tax withheld from their wages:
- Employees with no tax liability last year and none expected in the current year
- Nonresident employees
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from Illinois income tax must use one of the following forms:
- Form IL-W-4, Employee’s and other Payee’s Illinois Withholding Allowance Certificate. Employees who want to claim tax-exempt status because of their tax liability can use this form. To claim this exemption, employees must check the appropriate exempt status box and skip lines 1 through 3.
- Form W-5-NR, Employee’s Statement of Nonresidence in Illinois. Nonresident employees who work in Illinois can use this form to claim exempt status as nonresident military spouses or nonresident employees that live in Iowa, Kentucky, Michigan, or Wisconsin. Form W-5-NR is broken up into two parts. Employees provide the information in part one. You provide the information in part two. To claim this exemption, employees must mark the box that corresponds to their resident state.
Indiana
One type of employee in Indiana may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
Indiana employees can claim tax-exempt status if they are nonresident employees.
What forms do you need to collect from employees?
Employees who want to claim exempt from Indiana income tax must use the following form:
- Form WH-4MIL, Annual Nonresident Military Spouse. Nonresident military spouses can use this form to claim tax-exempt status. Employees must check the appropriate box to start and terminate their exemption.
Iowa
Two types of employees in Iowa may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Iowa income tax withheld from their wages:
- Employees with no tax liability last year and none expected in the current year
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from Iowa income tax must use the following form:
- Form IA-W-4, Employee Withholding Allowance Certificate. Employees must use this form to claim either tax-exempt status.
Kansas
Two types of employees in Kansas may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Kansas income tax withheld from their wages:
- Employees with no tax liability last year and none expected in the current year
- Nonresident military spouses
What forms do you need to collect from employees?
Employees that want to claim exempt from Kansas income tax must use the following form:
- Form K-4, Kansas Employee’s Withholding Allowance Certificate. To claim either tax-exempt status mentioned above, employees must use this form.
Kentucky
Four types of employees in Kentucky may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Kentucky income tax withheld from their wages:
- Employees with a qualifying gross income for their filing status
- Nonresident military spouses
- Nonresidents who live in a state with a reciprocal agreement
- U.S. military servicemembers
What forms do you need to collect from employees?
Employees who want to claim exempt from Kentucky income tax must use the following form:
- Form K-4, Kentucky’s Withholding Certificate. Employees who wish to claim any tax-exempt status in Kentucky must use this form. Employees must check the appropriate box designating why they should be exempt from income tax withholding.
Louisiana
Two types of employees in Louisiana may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Louisiana income tax withheld from their wages:
- Employees with no tax liability last year and none expected in the current year
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from Louisiana income tax must use the following form:
- Form R-1307, State of Louisiana Exemption from Withholding Louisiana Income Tax. To claim either tax-exempt status mentioned above, employees must use this form. Employees must check the appropriate box designating why they should be exempt from income tax withholding.
Maine
Two types of employees in Maine may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Maine income tax withheld from their wages:
- Employees with a qualifying gross income for their filing status
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from Maine income tax must use the following form:
- Form W-4ME, Employee’s Withholding Allowance Certificate. To claim either tax-exempt status mentioned above, employees must use this form. Employees must check the appropriate box designating why they should be exempt from income tax withholding.
Maryland
Three types of employees in Maryland may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Maryland income tax withheld from their wages:
- Employees who had no Maryland income tax liability last year and expect to have non in the current year
- Nonresident military spouses
- Nonresidents who live in a state with a reciprocal agreement
What forms do you need to collect from employees?
Employees who want to claim exempt from Maryland income tax must use one of the following forms:
- Form MW507, Employee’s Maryland Withholding Exemption Certificate. To claim any tax-exempt status in Maryland, employees must use this form. Nonresident military spouses must complete this form and Form MW507M.
- Form MW507M, Exemption from Maryland Withholding Tax for Qualified Civilian Spouse of a U.S. Armed Forces Servicemember. Nonresident military spouses must also file this form to claim tax-exempt status.
Massachusetts
One type of employee in Massachusetts may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
Massachusetts employees can claim tax-exempt status if they are nonresident military spouses.
What forms do you need to collect from employees?
Employees that want to claim exempt from Massachusetts income tax must use the following form:
- Form M-4-MS, Annual Withholding Tax Exemption Certificate for Nonresident Military Spouse. Employees who would like to claim tax-exempt status as nonresident military spouses must use this form.
Michigan
Five types of employees in Michigan may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Michigan income tax withheld from their wages:
- Employees with a permanent home in a Renaissance Zone
- Employees with no tax liability last year and none expected in the current year
- Native Americans
- Nonresident military spouses
- Nonresidents who live in a state with a reciprocal agreement
What forms do you need to collect from employees?
Employees that want to claim exempt from Michigan income tax must use the following form:
- Form MI-W4, Employee’s Michigan Withholding Exemption Certificate. Employees must use this form to claim tax-exempt status for any reason by checking the appropriate box.
Minnesota
Five types of employees in Minnesota may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Minnesota income tax withheld from their wages:
- Employees receiving a military pension or other military retirement pay
- Employees with no income tax liability last year and none expected in the current year
- Member of the Minnesota National Guard or active duty U.S. military member
- Native Americans
- Nonresident military spouses
What forms do you need to collect from employees?
Employees that want to claim exempt from Minnesota income tax must use the following form:
- Form W-4MN, Minnesota Withholding Allowance/Exemption Certificate. Employees must use this form to claim tax-exempt status for any reason by checking the appropriate box.
- Income Tax Fact Sheet 5, Military Personnel. Employees who are members of the Minnesota National Guard or U.S. military can use this tax sheet for more information.
Mississippi
One type of employee in Mississippi may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
Mississippi employees can claim tax-exempt status if they are nonresident military spouses.
What forms do you need to collect from employees?
Employees who want to claim exempt from Mississippi income tax as a nonresident military spouse must submit the following forms:
- Form 89-350, Mississippi Employee’s Withholding Exemption Certificate. Nonresident military spouses must use this form to claim tax-exempt status.
- Form DD-2058, State of Legal Residence Certificate. Employees must submit this federal form and a copy of their Military Spouse ID card to Form 89-350 so you can validate their exemption claim.
- Form 80-205, Non-Resident Individual Income Tax Return. Employees must also file this joint tax return.
Missouri
Three types of employees in Missouri may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Missouri income tax withheld from their wages:
- Active duty military members
- Employees with no tax liability last year and none expected in the current year
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from Missouri income tax must use the following form:
- Form MO W-4, Employee’s Withholding Certificate. To claim tax-exempt status, employees must use this form. Employees must check the appropriate boxes designating why they should be exempt from income tax withholding.
Montana
Four types of employees in Montana may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Montana income tax withheld from their wages:
- Members of the Reserve or National Guard
- Native Americans
- Nonresident military spouses
- Residents of North Dakota
What forms do you need to collect from employees?
Employees who want to claim exempt from Montana income tax must use one of the following forms:
- Form MW-4, Montana Employee’s Withholding Allowance and Exemption Certificate. Employees must use this form to o claim tax-exempt status for any reason by completing the appropriate lines.
Nebraska
One type of employee in Nebraska may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
Nebraska employees can claim tax-exempt status if they had no tax liability last year and expect none for the current year.
What forms do you need to collect from employees?
Employees who want to claim exempt from Nebraska income tax must use the following form:
- Form W-4N, Nebraska Withholding Allowance Certificate. Employees must use this form to claim exemption.
New Hampshire
New Hampshire does not have a state income tax.
New Jersey
One type of employee in New Jersey may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
New Jersey employees can claim tax-exempt status if they had no tax liability last year and expect none for the current year.
What forms do you need to collect from employees?
Employees who want to claim exempt from New Jersey income tax must use the following form:
- Form NJ-W4, Employee’s Withholding Allowance Certificate. Employees must use this form to claim tax-exempt status because of their tax liability.
New Mexico
Three types of employees in New Mexico may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no New Mexico income tax withheld from their wages:
- Native Americans
- Nonresident military spouses
- Qualifying military servicemembers (e.g., nonresident military servicemember or public health service)
What forms do you need to collect from employees?
Employees who want to claim exempt from New Mexico income tax must use the following forms:
- PIT-1, Personal Income Tax Return. Employees must file this form if they are a resident of New Mexico, earn wages from New Mexico sources, and are required to file a federal income tax return.
- PIT-ADJ, New Mexico Schedule of Additions, Deductions, and Exemptions. To claim tax-exempt status, employees must use this form. Employees must complete the appropriate lines designating why they should be exempt from income tax withholding.
- PIT-B, Schedule of New Mexico Allocation and Apportionment of Income. Employees who wish to claim exemption as nonresident military spouses must complete this form and allocate income from services performed in New Mexico to their state of residence.
- RPD-41348, Military Spouse Withholding Tax Exemption Statement. Employees who wish to claim exemption as nonresident military spouses must submit this form to you every year.
New York
Two types of employees in New York may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no New York income tax withheld from their wages:
- Employees with no tax liability last year and none expected in the current year (including students under the age of 25)
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from New York income tax must use the following form:
- Form IT-2104-E, Certificate of Exemption From Withholding. Employees must check the appropriate boxes on this form to claim tax exemption for any qualifying reason.
North Carolina
Two types of employees in North Carolina may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no North Carolina income tax withheld from their wages:
- Employees with no tax liability last year and none expected in the current year
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from North Carolina income tax must use the following form:
- Form NC-4EZ, Employee’s Withholding Allowance Certificate. Employees must complete the appropriate lines on this form to claim tax exemption for either qualifying reason.
- Form D-401, North Carolina Individual Income Tax Instructions. Use this form for more information.
North Dakota
Three types of employees in North Dakota may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no North Dakota income tax withheld from their wages:
- Native Americans
- Nonresident employees that live in Minnesota or Montana
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from North Dakota income tax must use one of the following forms:
- Form NDW-R, Reciprocity Exemption From Withholding For Qualifying Minnesota and Montana Residents Working in North Dakota. Employees must use this form to claim tax-exempt status as nonresident employees living in Minnesota or Montana. You must verify that the employee’s ID is correct and make a copy of this form for your records. Mail the original copy of this form to:
Office of State Tax Commissioner
600 E Boulevard Ave. Dept. 127
Bismarck, ND
58505-0599
- Form ND-1, Individual Income Tax Return. Enrolled members of a North Dakota Indian tribe that live and work on their tribal lands can claim tax exempt using this form. To claim this exemption, employees must enter the income earned on their tribal lands on line 8. Any wages earned off of the tribal lands will not qualify for this exemption.
- Form NDW-M, Exemption From Withholding for a Qualifying Spouse of a U.S. Armed Forces Servicemember. Employees must use this form to claim tax-exempt status as nonresident military spouses.
Ohio
Four types of employees in Ohio may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Ohio income tax withheld from their wages:
- Nonresident military servicemembers
- Nonresident military spouse
- Nonresidents who live in a state with a reciprocal agreement
- Ohio military servicemembers stationed outside Ohio
What forms do you need to collect from employees?
Employees who want to claim exempt from Ohio income tax must use the following form:
- Form IT 4, Employee’s Withholding Exemption Certificate. Employees must use this form to claim tax exemption from state tax for any qualifying reason.Employees must complete the appropriate sections and provide their school district of residence and school district number.
Oklahoma
Two types of employees in Oklahoma may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Oklahoma income tax withheld from their wages:
- Employees with no tax liability for the previous and current year
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from Oklahoma income tax must use the following forms:
- Form OK-W-4, Employee’s State Withholding Allowance Certificate. Employees must complete the appropriate lines on this form designating why they should be exempt from income tax withholding.
- Form OW-9-MSE, Annual Withholding Tax Exemption Certification for Military Spouses. Nonresident military spouses who want to claim tax-exempt status also need to complete this form. Employees must show you their current Military ID. You don’t have to accept the ID if it was issued four or more years ago.
Oregon
Twelve (yes, 12!) types of employees in Oregon may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Oregon income tax withheld from their wages:
- Air carrier employees
- American Indians (e.g., an enrolled tribal member living and working in Indian Country in Oregon)
- Amtrak Act workers
- Casual laborers
- Domestic service workers
- Employees with no tax liability last year and none expected in the current year
- Hydroelectric dam workers at Bonneville, John Day, McNary, or the Dalles dams
- Ministers
- Nonresident employees
- Nonresident military members and their spouses
- Real estate salespersons
- Waterway workers
What forms do you need to collect from employees?
Employees who want to claim exempt from Oregon income tax must use the following form:
- Form OR-W-4, Oregon Employee’s Withholding Statement and Exemption Certificate. Employees must enter the appropriate code on this form designating why they should be exempt from income tax withholding.
Pennsylvania
Three types of employees in Pennsylvania may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Pennsylvania income tax withheld from their wages:
- Employees with no tax liability last year and none expected in the current year
- Nonresident military spouses
- Nonresidents who live in a state with a reciprocal agreement
What forms do you need to collect from employees?
Employees who want to claim exempt from Pennsylvania income tax must use the following form:
- Form REV-419, Employee’s Nonwithholding Application Certificate. Employees must check the appropriate box designating why they should be exempt from income tax withholding on this form.
Rhode Island
Two types of employees in Rhode Island may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Rhode Island income tax withheld from their wages:
- Employees with no tax liability last year and none expected in the current year
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from Rhode Island income tax must use the following form:
- Form RI W-4, Employee’s Withholding Allowance Certificate. Employees must complete the appropriate lines on this form designating why they should be exempt from income tax withholding.
South Carolina
Two types of employees in Rhode Island may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Rhode Island income tax withheld from their wages:
- Employees with no tax liability last year and none expected in the current year
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from Rhode Island income tax must use the following form:
- Form SC W-4, South Carolina Employee’s Withholding Allowance Certificate. Employees must complete the appropriate lines on this form designating why they should be exempt from income tax withholding.
South Dakota
South Dakota does not have a state income tax withholding.
Tennessee
Tennessee does not have a state income tax withholding.
Texas
Texas does not have a state income tax withholding.
Utah
Two types of employees in Utah may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Utah income tax withheld from their wages:
- Interstate transportation employees
- Nonresident military spouses
What forms do you need to collect from employees?
Employees who want to claim exempt from Utah income tax must use the following form:
- Federal Form W-4. To claim tax-exempt status, employees must complete this form and write the reason for their exemption under box 4c.
Careful! Make sure that you do not report wages from interstate transportation employees as Utah wages in box 16 of Form W-2. But, even though wages for nonresident military spouses are tax exempt, you must report them on Form W-2 box 4c.
Vermont
One type of employee in Vermont may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
Vermont employers can claim tax-exempt status if they had no tax liability last year and expect to have none for the current year.
What forms do you need to collect from employees?
Employees who want to claim exempt from Vermont income tax must use the following form:
- Form W-4VT, Employee’s withholding allowance Certificate. Employees must enter “Exempt” on the appropriate line to claim exempt status.
Virginia
Four types of employees in Virginia may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Virginia income tax withheld from their wages:
- Commuting employees
- Employees with no tax liability last year and none expected in the current year
- Nonresident military spouses
- Nonresidents who live in a state with a reciprocal agreement
What forms do you need to collect from employees?
Employees who want to claim exempt from Vermont income tax must use the following forms:
- Form VA-4, Personal Exemption Worksheet. To claim tax-exempt status, employees must use this form. Employees must check the appropriate boxes designating why they should be exempt from income tax withholding.
- Form 763S, Virginia Special Nonresident Claim For Individual Income Tax Withheld. Employees can use this form to claim exempt status as nonresident employees if they live in Maryland, Pennsylvania, or West Virginia. Employees can use this form to claim exempt status as a commuter if they commute daily to Virginia from Kentucky or the District of Columbia.
- Form DD-2058, State of Legal Residence Certificate. Employees who want to claim tax-exempt status as nonresident military spouses also need to submit this form.
Washington
Washington does not have a state income tax.
Washington D.C.
One type of employee in Washington D.C. may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
Nonresident employees working in Washington D.C. can claim tax-exempt status.
What forms do you need to collect from employees?
Employees who want to claim exempt from Washington D.C. income tax must use the following form:
- Form D-4A, Certificate of Nonresidents in the District of Columbia. To qualify as a nonresident working in D.C., employees must have a permanent residence outside of D.C. during all of the tax year and can only reside in D.C. during the tax year for less than 183 days.
West Virginia
Two types of employees in West Virginia may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no West Virginia income tax withheld from their wages:
- Nonresident military spouses
- Nonresidents who live in a state with a reciprocal agreement
What forms do you need to collect from employees?
Employees who want to claim exempt from West Virginia income tax must use the following form:
- Form WV IT-104, Employee’s Withholding Exemption Certificate. Employees must complete the second page of this form and give it to you.
Wisconsin
One type of employee in Wisconsin may qualify for tax-exempt status in the state.
Who can claim state tax exemption?
The following groups can choose to have no Wisconsin income tax withheld from their wages:
- Nonresident military spouses
- Nonresidents who live in a state with a reciprocal agreement
What forms do you need to collect from employees?
Employees who want to claim exempt from Wisconsin income tax must use the following form:
- Form WT-4, Employee’s Wisconsin Withholding Exemption Certificate/New Hire Reporting. Employees must complete the appropriate lines designating why they should be exempt from income tax withholding.
Wyoming
Wyoming does not have a state income tax.
Chart
| State | Which Employees Can Claim Tax Exemption? | Forms to Collect from Employees Claiming Tax Exemption |
|---|---|---|
| Alabama | Employees with no income tax liability in the previous year and expect to have none in the current year | Form A4, Employee’s Withholding Exemption Certificate |
| Alabama | Nonresident military spouses | Form A4-MS Nonresident Military Spouse Withholding Tax Exemption Certificate |
| Alaska | N/A (no state income tax) | N/A (no state income tax) |
| Arizona | Native Americans
Nonresidents who live in a state with a reciprocal agreement Nonresident military spouses |
Form WEC, Employee Withholding Exemption Certificate |
| Arkansas | Employees with a qualifying gross income for their filing status
Military servicemembers Nonresident military spouses |
Form AR4ECSP, Employee’s Special Withholding Exemption Certificate |
| California | Employees with no income tax liability in the previous year and expect to have none in the current year
Nonresident military spouses |
Form DE-4, Employee’s Withholding Allowance Certificate |
| Colorado | Nonresident military spouses | Form DR1059, Affidavit of Exemption for the Nonresident Spouse of a U.S. Servicemember |
| Connecticut | Nonresident military spouses | Form CT-W4, Employee’s Withholding Certificate |
| Delaware | Nonresident military spouses | Form W-4DE, Annual Withholding Tax Exemption Certification for Military Spouse |
| Florida | N/A (no state income tax) | N/A (no state income tax) |
| Georgia | Employees with no income tax liability in the previous year and expect to have none in the current year
Nonresident military spouses |
Form G-4, State of Georgia Employee’s Withholding Allowance Certificate |
| Hawaii | Nonresident employees | Form HW-6, Employee’s Statement to Employer Concerning Nonresidence in the State of Hawaii |
| Idaho | Employees with a qualifying gross income for their filing status | Form ID W-4, Employee’s Withholding Allowance Certificate |
| Idaho | Nonresident aliens | Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual
(Nonresident aliens must also file Form ID W-4) |
| Idaho | Nonresident military spouses | Form ID-MS1, Employee’s Idaho Military Spouse Withholding Exemption Certificate
(Nonresident military spouses must also file Form ID W-4) |
| Illinois | Employees with no tax liability last year and none expected in the current year | Form IL-W-4, Employee’s and other Payee’s Illinois Withholding Allowance Certificate. |
| Illinois | Nonresident employees
Nonresident military spouses |
Form W-5-NR, Employee’s Statement of Nonresidence in Illinois |
| Indiana | Nonresident military spouses | Form WH-4MIL, Annual Nonresident Military Spouse |
| Iowa | Employees with no tax liability last year and none expected in the current year
Nonresident military spouses |
Form IA-W-4, Employee Withholding Allowance Certificate |
| Kansas | Employees with no tax liability last year and none expected in the current year
Nonresident military spouses |
Form K-4, Kansas Employee’s Withholding Allowance Certificate |
| Kentucky | Employees with a qualifying gross income for their filing status
Nonresidents who live in a state with a reciprocal agreement Nonresident military spouses U.S. military servicemembers |
Form K-4, Kentucky’s Withholding Certificate |
| Louisiana | Employees with no tax liability last year and none expected in the current year
Nonresident military spouse |
Form R-1307, State of Louisiana Exemption from Withholding Louisiana Income Tax |
| Maine | Employees with a qualifying gross income for their filing status
Nonresident military spouses |
Form W-4ME, Employee’s Withholding Allowance Certificate |
| Maryland | Employees with no tax liability last year and none expected in the current year
Nonresidents who live in a state with a reciprocal agreement |
Form MW507, Employee’s Maryland Withholding Exemption Certificate |
| Maryland | Nonresident military spouses | Form MW507M, Exemption from Maryland Withholding Tax for Qualified Civilian Spouse of a U.S. Armed Forces Servicemember
(Nonresident military spouses must also file Form MW507) |
| Massachusetts | Nonresident military spouses | Form M-4-MS, Annual Withholding Tax Exemption Certificate for Nonresident Military Spouse |
| Michigan | Employees with a permanent home in a Renaissance Zone
Employees with no tax liability last year and none expected in the current year Native Americans Nonresident military spouses Nonresidents who live in a state with a reciprocal agreement |
Form MI-W4, Employee’s Michigan Withholding Exemption Certificate |
| Minnesota | Employees receiving a military pension or other military retirement pay
Employees with no income tax liability last year and none expected in the current year Members of the Minnesota National Guard or active duty U.S. military member Native Americans Nonresident military spouses |
Form W-4MN, Minnesota Withholding Allowance/Exemption Certificate. |
| Mississippi | Nonresident military spouses | Form 89-350, Mississippi Employee’s Withholding Exemption Certificate
Form DD-2058, State of Legal Residence Certificate Form 80-205, Non-Resident Individual Income Tax Return |
| Missouri | Active duty military members
Employees with no tax liability last year and none expected in the current year Nonresident military spouses |
Form MO W-4, Employee’s Withholding Certificate |
| Montana | Members of the Reserve or National Guard
Native Americans Nonresident military spouses Residents of North Dakota |
Form MW-4, Montana Employee’s Withholding Allowance and Exemption Certificate |
| Nebraska | Employees with no income tax liability last year and none expected in the current year | Form W-4N, Nebraska Withholding Allowance Certificate |
| New Hampshire | N/A (no state income tax) | N/A (no state income tax) |
| New Jersey | Employees with no income tax liability last year and none expected in the current year | Form NJ-W4, Employee’s Withholding Allowance Certificate |
| New Mexico | Qualifying military servicemembers
American Indians |
PIT-1, Personal Income Tax Return.
PIT-ADJ, New Mexico Schedule of Additions, Deductions, and Exemptions PIT-B, Schedule of New Mexico Allocation and Apportionment of Income |
| New Mexico | Nonresident military spouses | RPD-41348, Military Spouse Withholding Tax Exemption Statement
(Nonresident military spouses must also submit PIT-1, PIT-ADJ, and PIT-B) |
| New York | Employees with no tax liability and none expected in the current year (including students under the age of 25)
Nonresident military spouses |
Form IT-2104-E, Certificate of Exemption From Withholding |
| North Carolina | Employees with no tax liability last year and none expected in the current year
Nonresident military spouses |
Form NC-4EZ, Employee’s Withholding Allowance Certificate |
| North Dakota | Native Americans | Form ND-1, Individual Income Tax Return |
| North Dakota | Nonresident employees that live in Minnesota or Montana | Form NDW-R, Reciprocity Exemption From Withholding For Qualifying Minnesota and Montana Residents Working in North Dakota |
| North Dakota | Nonresident military spouses | Form NDW-M, Exemption From Withholding for a Qualifying Spouse of a U.S. Armed Forces Servicemember |
| Ohio | Nonresident military servicemembers
Nonresident military spouse Nonresidents who live in a state with a reciprocal agreement Ohio military servicemembers stationed outside Ohio |
Form IT 4, Employee’s Withholding Exemption Certificate |
| Oklahoma | Employees with no tax liability for the previous or current year | Form OK-W-4, Employee’s State Withholding Allowance Certificate |
| Oklahoma | Nonresident military spouses | Form OW-9-MSE, Annual Withholding Tax Exemption Certification for Military Spouses |
| Oregon | Air carrier employees
American Indians (e.g., an enrolled tribal member living and working in Indian Country in Oregon)Amtrak Act workers Casual laborers Domestic service workers Employees with no tax liability last year and none expected in the current year Hydroelectric dam workers at Bonneville, John Day, McNary, or the Dalles dams Ministers Nonresident employees Nonresident military members and their spouses Real estate salespersons Waterway workers |
Form OR-W-4, Oregon Employee’s Withholding Statement and Exemption Certificate |
| Pennsylvania | Employees with no tax liability last year and none expected in the current
Nonresident military spouses Nonresidents who live in a state with a reciprocal agreement |
Form REV-419, Employee’s Nonwithholding Application Certificate. |
| Rhode Island | Employees with no tax liability last year and none expected in the current year
Nonresident military spouses |
Form RI W-4, Employee’s Withholding Allowance Certificate |
| South Carolina | Employees with no tax liability last year and none expected in the current year
Nonresident military spouses |
Form SC W-4, South Carolina Employee’s Withholding Allowance Certificate |
| South Dakota | N/A (no state income tax) | N/A (no state income tax) |
| Tennessee | N/A (no state income tax) | N/A (no state income tax) |
| Texas | N/A (no state income tax) | N/A (no state income tax) |
| Utah | Interstate transportation
Nonresident military spouses |
Federal Form W-4 |
| Vermont | Employees with no tax liability last year and none expected in the current year | Form W-4VT, Employee’s withholding allowance Certificate |
| Virginia | Employees with no tax liability last year and none expected in the current year | Form VA-4, Personal Exemption Worksheet |
| Virginia | Nonresidents who live in a state with a reciprocal agreement
Commuting employees |
Form 763S, Virginia Special Nonresident Claim For Individual Income Tax Withheld
(Commuting employees and nonresident military spouses must also file Form VA-4) |
| Virginia | Nonresident military spouses | Form DD-2058, State of Legal Residence Certificate
(Nonresident military spouses must also file Form VA-4 and Form 763S) |
| Washington | N/A (no state income tax) | N/A (no state income tax) |
| Washington D.C. | Nonresident employees | Form D-4A, Certificate of Nonresidents in the District of Columbia |
| West Virginia | Nonresident military spouse
Nonresidents who live in a state with a reciprocal agreement |
Form WV IT-104, Employee’s Withholding Exemption Certificate |
| Wisconsin | Nonresident military spouses
Nonresidents who live in a state with a reciprocal agreement |
Form WT-4, Employee’s Wisconsin Withholding Exemption Certificate/New Hire Reporting. |
| Wyoming | N/A (no state income tax) | N/A (no state income tax) |
Whew! Withholding the proper amount of income tax can feel like a full-time job. If you want your payroll taxes to be easier than ever, Patriot Software has you covered. Patriot’s Full Service payroll has an employee portal so employees can easily track important tax documents. And, Patriot will even file and remit local, state, and federal taxes. Get your free trial today!
This is not intended as legal advice; for more information, please click here.
