When you lived in two states during 2025 -- the first, for only about two months and the second, for the remainder -- how is the tax burden allocated between the states?

[estephenkim]

Based on my completed TurboTax return, it seems that I'm receiving a full refund of state income taxes withheld from the shorter residence state while paying additional taxes to the longer residence state. Is this normal, expected?

[DavidD66]

It depends on the states.  States have different ways of calculating tax for part-year.  Some calculate tax by using just the amount of income that applies to that state to determine the tax rate, while others (states with higher & progressive tax rates) calculate the tax using your total federal income to determine your rate, and then apply that rate to your income from that state.  

I suggest you review your state tax return sections and make sure that you have correctly allocated your income between the states.

[NCperson]

@estephenkim hard to answer that question without more detail.  Be sure you are filing part-year tax returns in both states.  if you'd indicated to TT which income was earned in which state, it will be able to figure out how to determine the tax due to each state.

[estephenkim]

Thanks.  I'm a bit unclear about the Credit for Tax Paid to Other States.  Could it apply in my case when I file part-year tax returns in Virginia (resident from Jan 1 - Mar 8, 2025) and Maryland (Mar 8 - Dec 31, 2025) or does it apply only when you file a non-resident return?

[NCperson]

@estephenkim it only applies when you file a non-resident tax return.

When you file two part year returns, each state "stands on its own".  You report the income earned in the respective state and the tax is calculated independently of the other.  This occurs when you physically move your residence from one state to the other.

When you file a non-resident and resident tax return, there is dependency.  You only report the income you earned in the non-resident state to that state, but you report ALL the income you earned to the resident state.  That creates an overlap since the non-resident income is  reported to both states.  That is what creates the credit.  The resident state calculates a credit for income tax paid to the non-resident state.  This occurs when you live in one state, but work in another. 

[estephenkim]

Thank you.