7 — State Income Updated for tax year 2025

What this line means

The amount of nonemployee compensation that is subject to state income tax in the state listed in Box 6. This may be the same as Box 1 (if all your work for this payer was performed in that state) or a portion of Box 1 (if you worked in multiple states for the same payer). This amount goes on your state tax return to determine state income tax.

Does this apply to you?

• You performed work in a state that requires reporting of nonemployee income to the state tax authority
• You are filing a nonresident state return and need to know how much income that state claims
• Your 1099-NEC has state information in Boxes 5 through 7

Easy to overlook

State income can differ from federal income on the same 1099-NEC If you worked in California for one project and Texas for another for the same client, Box 1 shows the total but Box 7 shows only the California portion. Texas has no income tax, so only California appears in the state section. The state income amount drives what you report on the California nonresident return. ¹ [SOURCE: General filing pattern — state income allocation for nonresidents]

Your home state taxes this income too Even if another state withheld tax on your 1099-NEC income, your home state (if it has income tax) also taxes it. Most states offer a credit for taxes paid to other states so you are not double-taxed, but you must file in both states and claim the credit — it is not automatic. ² [SOURCE: IRS 1099-NEC instructions — Box 7]

Watch out for this

Only reporting the income to the state shown in Box 7 and not to your home state. Your state of residence taxes your worldwide income. If you earned $20,000 in New York (shown in Box 7) and live in New Jersey, you file a nonresident New York return and a resident New Jersey return. New Jersey gives you a credit for the New York tax paid.

Related lines on your return

• Box 1 — 1099-NEC — Nonemployee compensation (total federal income; may differ from Box 7)
• Box 5 — 1099-NEC — State tax withheld (withholding on the income in this box)
• Box 6 — 1099-NEC — State/payer’s state number (identifies the state)