State tax filing

DarenG,

 

Massachusetts is not truly taxing you on your Texas income.  They use the unitary taxation procedure to determine your state tax.  In this method, they first calculate the MA state income tax they would have imposed had you earned your income and lived in MA the whole year and then they prorate it proportional to the percentage of income actually earned in MA.  Note that this is different, and generally a larger state tax bill than if they just directly taxed your MA-specific income because MA has a progressive income tax table with higher incomes taxed more heavily.

 

Unitary taxation was devised a long, long time ago when it was discovered that millionaires were carefully splitting their sources of income across many individual states.  The the tax laws at that time calculated each small piece at the lowest tax rate for each state, effectively claiming poverty-level income rates.