Locum Tenens State Taxes: Filing in Every State You Worked
You worked four assignments this year in three states, you live in a fourth, and every 1099 you received shows one number with no state breakdown on it. Nobody told you what to do about that, and the agency's back office will not tell you either, because it is not their problem.
It is a solvable problem, and almost all of it follows from one rule.
The rule everything else comes from
Income from personal services is sourced to the state where the services were physically performed. For a 1099 locum, that means the state you were standing in when you saw the patients.
It does not follow the agency's headquarters. It does not follow the hospital system's parent company. It does not follow where the payment was deposited, where your LLC is registered, or where you happen to live. Four things people expect to matter, and none of them do.
This is also the point where locum tenens and travel nursing genuinely part company. A W-2 traveller's wages are covered by rules written for employees. Your income is business income from services, and it is allocated on the facts of where the work happened.
Which returns you actually file
Two categories, and you can be in both at once.
- A nonresident return in every state you worked in that has an income tax and whose filing threshold you crossed. This reports only the income sourced to that state.
- A resident return in your home state, which reports all of your income — including every dollar you earned in the other states — and then gives you a credit for tax you paid to them.
So a physician resident in Arizona who worked assignments in California and Oregon files three state returns: two nonresident, one resident. Three sets of rules, three portals, three deadlines. This is the part that surprises people in their first locum year, and it is the reason the fee from a preparer who handles multi-state returns is money well spent.
Thresholds are not uniform, and there is no federal rule
Every state sets its own filing threshold. Some use a dollar amount of in-state income, a few use a day count, and several have neither — meaning one day of work creates a filing obligation. A federal bill to impose a uniform 30-day threshold has been introduced in successive Congresses and has never been enacted, so there is nothing to rely on. Check the revenue department of each state before assuming a short assignment is too small to matter.
The resident credit, and why you always pay the higher rate
Your home state taxes your worldwide income, so without something else the same dollars would be taxed twice. The something else is the credit for taxes paid to other states, claimed on your resident return.
The credit is capped. It is the lesser of:
- the tax you actually paid to the other state on that income, or
- the tax your home state would have charged on that same income.
That cap has a consequence worth internalising: on any dollar you earn out of state, you end up paying the higher of the two states' rates. Never the lower, never the sum. If you work in a high-tax state you keep its rate. If you work in a low-tax state and live in a high-tax one, your home state collects the difference.
Worked: Arizona resident, half the year in California
The standard contract used across this site — $1,600/day, 5 days, 42 weeks, $336,000 gross, single filer, no expenses entered — worked half in Arizona and half in California. Federal AGI is $320,062. All figures from this site's calculator.
California nonresident return. California computes the tax as though the whole $320,062 were Californian — $25,521 — then multiplies by the California share of income, 50%: $12,761 to California.
Arizona resident return. Arizona taxes the full $320,062: $7,693. The credit is the lesser of what California took on the California half ($12,761) and what Arizona would have charged on it ($7,693 × 50% = $3,847). The credit is $3,847, leaving $3,846 to Arizona.
Total state tax: $16,607. Had all the work been in Arizona it would have been $7,693. Had the physician been a California resident working entirely in California, $25,521. You landed in between — because on the California half you paid California's rate, and on the Arizona half you paid Arizona's.
The detail that costs the most money
Read the California step again. The state did not tax $160,000 of income at the rate $160,000 attracts. It computed the tax on your entire income and then took its percentage of that figure.
California and New York both work this way, and they are not unusual. The practical effect is that a short, highly paid assignment in a high-tax state is taxed at the marginal rate your whole year reaches — not at the modest rate a few weeks of income would suggest in isolation.
A three-week California assignment for a physician earning $336,000 for the year is not taxed as though it were a $24,000 job. It is taxed at the top of the range your total income reaches, prorated down. Anyone budgeting a short assignment by applying a state's lowest bracket to it will be short.
Reciprocity agreements will not help you
This one catches almost everybody, because the advice is everywhere and it is written for employees.
Around a dozen and a half states have reciprocal agreements with neighbours — Pennsylvania and New Jersey, Maryland and Virginia and DC, a cluster in the Midwest. Under them, a resident of one state working in the other pays tax only at home and files nothing in the work state.
Those agreements cover wages and salaries paid to employees. They do not cover self-employment or business income. As a 1099 locum you are outside them entirely, and a nonresident return in the work state is due exactly as though no agreement existed. A colleague on staff at the same hospital may be right that they do not have to file — and it tells you nothing about your position.
No-income-tax states cut in one direction only
Texas, Florida, Tennessee, Nevada, Washington, Wyoming, South Dakota and Alaska levy no individual income tax. Which of your two states is which decides whether that helps.
| You live in | You work in | What happens |
|---|---|---|
| Texas | California | California nonresident return and California tax. No home-state return. You keep nothing from living in Texas for that income. |
| California | Texas | No Texas return, but California taxes it in full as a resident. There is no other-state tax to credit, so you pay the whole California bill on income earned entirely outside California. |
| Texas | Texas | No state income tax at all. This is the only combination that actually saves you the money. |
The second row is the one that stings. Working an assignment in a no-tax state does nothing for you while your residence is in a taxing state — residence is what pulls the income back in. Our state-by-state ranking holds one identical contract constant and varies only the tax code, and the spread across the country is $27,042 on the same work.
The taxes no credit will cover
The resident credit relieves double taxation of income tax. Several states tax business activity by a different mechanism, and those sit outside the credit entirely — you pay them on top, with no offset at home.
- Washington — a Business & Occupation tax on gross receipts from services. No income tax, but an independent contractor working there generally has a registration and filing obligation. It is charged on revenue, not profit.
- New Mexico — gross receipts tax, which can reach independent medical services depending on the arrangement and the payer.
- Hawaii — General Excise Tax on gross business receipts; a contractor working there generally needs a GET licence.
- District of Columbia — an Unincorporated Business Franchise Tax on unincorporated businesses with DC-source gross income over the filing threshold, which catches independent contractors working in the District.
- New Hampshire — no tax on ordinary individual income, but a Business Profits Tax and Business Enterprise Tax apply above filing thresholds, and a busy locum can cross them.
None of these are modelled by the calculator, and all of them are stated in the note that appears when you select the state.
Local taxes, which nobody warns you about
Below the state layer sits a municipal one, and in several states it applies to net profits and not merely to wages.
- Ohio — most municipalities levy 1%–3% on net profits earned in the city.
- Pennsylvania — nearly every municipality and school district levies an Earned Income Tax of 1%–3.9% that reaches net profits. In Pennsylvania this field is rarely zero.
- Kentucky — county and city occupational licence taxes on net profits, often 1%–2.5%.
- Maryland — every county adds roughly 2.25%–3.20% on top of the state rate. This one is large.
- Indiana — every county levies its own income tax, commonly 1%–3%.
- Missouri — Kansas City and St. Louis each levy a 1% earnings tax that applies to net profits, not only wages.
- New York City — city income tax applies to residents. A nonresident who only works in the city does not pay it.
The calculator has an optional local rate field for exactly this. If you are working in any of the states above, it is not optional in practice.
Estimated payments multiply too
Each taxing state wants its own instalments on its own form, and the due dates are not always the federal ones. Working three taxing states can mean three separate estimate schedules alongside the federal one. Our guide to quarterly estimated tax covers the federal mechanics; the state layer sits on top of it.
What to keep, starting now
Your allocation between states has to come from somewhere, and the 1099-NEC will not provide it. The agency reports one total to the IRS. Splitting it is your job, and the split has to be defensible.
- Keep a day-by-day log of where you physically worked. A calendar export is enough. Reconstructing it two years later from memory is not.
- Keep signed contracts and assignment confirmations showing site location and dates.
- Record travel and lodging by assignment, not as one annual lump — it corroborates the day log and it is how expense deductions get substantiated anyway.
- Note which state each payment relates to as it arrives.
- Before accepting an assignment, check the work state's filing threshold and whether it levies a gross receipts or local tax. It is part of what the contract is worth.
- Tell your preparer the list of states before filing season, not in April.
What this article does not settle
Residency itself. Everything above assumes you have one clear home state. If you moved during the year, keep a home in one state while working mostly in another, or have genuinely severed ties with nowhere new established, you may be a part-year resident, or two states may both claim you as a resident. That determination turns on domicile and on facts specific to you, several states audit it aggressively, and it is beyond what any calculator or article can decide. Take that one to a professional.
Sources
- California Franchise Tax Board, Residency status and part-year/nonresident filing — computation of nonresident tax on total income prorated by California-source ratio.
- New York State Department of Taxation and Finance, Nonresident and part-year resident FAQs.
- Washington State Department of Revenue, Business & Occupation tax.
- New Mexico Taxation and Revenue Department, Gross receipts tax overview.
- Hawaii Department of Taxation, General Excise Tax.
- District of Columbia Office of Tax and Revenue, Unincorporated Business Franchise Tax.
- State rate schedules used in the worked example: this site's 2026 tax parameter file, compiled from state revenue departments and re-verified against primary sources.
Run your own states
The locum take-home calculator models one state at a time, with the gross receipts and local tax caveats surfaced for each. Run each state you worked in separately, then read the pay by state pages for the detail.