Thread: State taxes
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Old 09-12-2011, 05:34 PM
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jagbn
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Joined APC: Apr 2007
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Assuming you're working for an air carrier, 49 USC 40116(f) applies, copied below. Short answer, you're taxed based upon your state of residence, so long as you regularly fly to at least two states. In the incredibly unlikely event that your company only flies in Illinois, you'd be taxed by Illinois. Your employer will withhold based upon your state of residence (unless you only fly in one state).

(f) Pay of Air Carrier Employees.— (1) In this subsection— (A) “pay” means money received by an employee for services.
(B) “State” means a State of the United States, the District of Columbia, and a territory or possession of the United States.
(C) an employee is deemed to have earned 50 percent of the employee’s pay in a State or political subdivision of a State in which the scheduled flight time of the employee in the State or subdivision is more than 50 percent of the total scheduled flight time of the employee when employed during the calendar year.

(2) The pay of an employee of an air carrier having regularly assigned duties on aircraft in at least 2 States is subject to the income tax laws of only the following: (A) the State or political subdivision of the State that is the residence of the employee.
(B) the State or political subdivision of the State in which the employee earns more than 50 percent of the pay received by the employee from the carrier.

(3) Compensation paid by an air carrier to an employee described in subsection (a) in connection with such employee’s authorized leave or other authorized absence from regular duties on the carrier’s aircraft in order to perform services on behalf of the employee’s airline union shall be subject to the income tax laws of only the following: (A) The State or political subdivision of the State that is the residence of the employee.
(B) The State or political subdivision of the State in which the employee’s scheduled flight time would have been more than 50 percent of the employee’s total scheduled flight time for the calendar year had the employee been engaged full time in the performance of regularly assigned duties on the carrier’s aircraft.
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