Personal Income Tax: The Other-State Tax Credit

The following article, Personal income tax: The other-state tax credit, originally appeared in the May 2023 issue of The Tax Adviser.

Individuals who derive income from multiple state jurisdictions are generally subject to any personal income tax those states impose. To reduce double (or multiple) taxation of the same income, many states permit resident (and sometimes nonresident) taxpayers to take personal income tax credits for net income taxes paid to other states. 

This article focuses on how states classify certain business taxes for these other-state tax credit purposes, using recent California developments to illustrate how states may analyze this issue.

BDO’s John Yoak and Teddy Tourian provide details on the other-state tax credit in their article in The Tax Adviser.