TL;DR: Moving for grad school usually means part-year resident returns in your old and new states, possible city or county taxes, and updating your state withholding on your first paycheck. Nine states don't tax wage income at all.
Federal taxes get most of the attention, but for many grad students the state return is where things go sideways. You move for your program, maybe from a state with no income tax to one with a high one, and suddenly you have two states, possibly a city, and a stipend that isn't always withheld like a normal paycheck.
This guide explains the basics: how states decide where you owe, what a part-year return is, and what to check in your first month so you don't get a surprise next spring. It's general information, not tax advice, and state rules vary widely, so confirm details with your state's revenue department.
The big idea: states tax where you live and where you work
Two things can make a state tax your income:
- Residency. If you live in a state, it generally taxes your income from all sources, wherever you earn it.
- Source. A state can tax income earned inside its borders, even if you don't live there.
So a grad student who lives and works in one state usually files a return there. Complications start when you move mid-year, work in a different state than you live in, or spend a summer at an internship in a third state.
If you moved mid-year: the part-year resident return
If you moved to your program's state during the year, you're generally a part-year resident of both your old and new states.
- In your old state, you file as a part-year resident and report income earned while you lived there.
- In your new state, you file as a part-year resident and report income earned after you moved.
Most tax software handles this if you enter your move date. Two things to have ready: the exact date you moved, and a way to split your income between the two periods, such as pay stubs showing year-to-date amounts on the date you left your old job.
If you moved in August and started an assistantship in September, you may only owe tax in the new state for that fall income, plus whatever you earned in your old state earlier in the year.
"But I'm still a resident of my home state"
Many students keep a parent's address, a driver's license, or a voter registration in their home state and assume that settles it. It usually doesn't. States generally look at where you actually live and how long you're there, not just the address on your license. Some states also have domicile rules that treat you as a resident of where you intend to return.
This is one of the trickier areas, and the rules differ by state. If you're unsure, check the residency guidance on your new state's tax website or ask a tax professional. Don't assume you owe nothing because your paperwork still points somewhere else.
Nine states don't tax wages
As of now, Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming don't tax wage income at the state level. State rules change, so check your state's revenue department before relying on this list. If you attend school in one of them, you'd generally have no state income tax return on your assistantship or stipend.
That matters when you compare offers. As an illustration (Estimated, not a real offer), a $34,000 stipend in a state with no income tax keeps more of its value than the same stipend somewhere with a 5% to 7% state tax. Our Compare tool shows stipends next to rent and other costs, and it's worth adding state tax to your mental math too.
Moving from a no-tax state to a taxing one (or the reverse) is the classic case where you'll file a part-year return in one state and a full-year return in the other.
Local taxes: the ones people miss
Some cities and counties add their own income or wage tax on top of state tax. Examples include Philadelphia, New York City, Pittsburgh and other Pennsylvania municipalities, many Ohio cities, and some Maryland counties. Whether your assistantship wages or stipend are subject depends on the locality's rules and how your pay is classified.
Check for local taxes before you sign a lease. A city wage tax is another line item in your budget, and it can also apply to people who work in the city but live elsewhere.
Working across state lines
Suppose you live in one state but your lab or campus is in another. A few situations come up often:
- You live in State A and work in State B. State B generally taxes the wages you earn there, and State A taxes your total income but usually gives a credit for tax paid to B so you're not taxed twice on the same money. You may need to file in both.
- Reciprocity agreements. Some neighboring states have agreements so you only pay tax to your home state. New Jersey and Pennsylvania have one, for example. If a reciprocity agreement covers you, you typically file an exemption form with your employer so the other state doesn't withhold.
- Summer internships and research stays. Income earned while working in another state can create a nonresident return there.
Does the state follow the federal rules on fellowships?
Most states start from your federal adjusted gross income, which means the federal exclusion for tuition and required fees usually carries through. But not all states follow federal treatment exactly, and some have their own rules on assistantship stipends and fellowship income. When in doubt, check the state's instructions for how it treats scholarship and fellowship income.
For federal basics, see our guide to filing your taxes as a grad student. If you're an international student, note that not every state honors federal tax treaty benefits, so income exempt federally may still be taxable at the state level. Our international student tax guide covers the federal side.
Your first-month checklist
Do these when you start your program, not next April:
- Update your state withholding. When you fill out payroll forms, use your new state's withholding form (or the state section of your onboarding paperwork). Otherwise you may have tax withheld for the wrong state, or none at all.
- Check your first paycheck. Look for state, and any local, tax lines. If the wrong state shows up, tell payroll right away.
- Ask if your stipend has withholding. Fellowship payments often have none. If yours don't, plan for estimated payments at the state level too. See our guide to quarterly estimated taxes.
- Keep a record of your move date and where you lived when.
- Note any local taxes for your city or county.
- Save all state tax forms you receive, including W-2s with multiple state boxes.
Filing the return
In practice, you file your federal return first, then your state returns using the federal figures as a starting point. Good tax software will ask for your move date and handle the part-year math. If you need to file in more than two states, or you have a complicated mix of wages, fellowship income, and summer work, a tax professional is worth paying for once.
State deadlines usually match the federal April date, but a few states differ, so confirm the deadline for each state you file in.
Common mistakes
- Assuming no W-2 means no state tax. Fellowship income is often taxable at the state level too.
- Not filing in the old state after moving mid-year.
- Forgetting local taxes like a city wage tax.
- Leaving withholding pointed at your old state.
- Assuming a home-state license settles your residency.
Where to look next
Every state's revenue department publishes instructions and forms for part-year and nonresident filers, and most have a page for students. For the overall picture of what your stipend is really worth in a given city, use the Compare tool alongside a quick check of state and local taxes.
This article is for general information and is not tax, legal, or financial advice. State and local rules change frequently and vary by situation, so verify details with your state revenue department or a qualified tax professional.