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This article provides general information about state and federal income tax withholding exemptions with instructions on how to claim and renew them in Justworks.
State Tax Exemption
If you live in a state that imposes personal income tax, you may be eligible to claim exemption from state income tax withholding if you had no state income tax liability in the prior tax year, and you expect to have no state income tax liability in the current tax year, as defined by your state’s tax authority.
Depending on state-specific rules, other individuals who may qualify for exemption include:
- Military servicebmembers or their nonresident spouses.
- Nonresident employees who live in a state with a reciprocal tax agreement.
To claim exemption: Complete the applicable state tax form for the relevant tax year, according to the form instructions. Complete only the employee sections of this form. Do not fill in the employer section, your employer will complete that portion.
If you are a New York employee, you must submit Form IT-2104-E as a paper form directly to Justworks — New York exemptions cannot be processed through the in-app submission. For all other states, mark, mark yourself tax exempt in your Justworks profile if you go to account settings>finances>tax info>edit. Submit a new form each year to continue to be exempt.
If you missed the deadline to submit or renew your exemption, submit the appropriate form as soon as possible to stop future withholding. Changes will typically take effect in the next payroll cycle. Justworks is generally unable to reimburse you for prior tax withholdings. Any over-withheld amounts may typically be reconciled when you file your annual tax return.
Renewing State Tax Exemption
Renewal requirements for state tax exemptions vary by state. In some states, employees must submit a new exemption form annually, while in others, exemptions may remain in effect until changed.
If renewal is required, Justworks will notify you in advance and prompt you to take action. For New York employees, renewal requires submission of a new paper IT-2104-E form directly to Justworks.
States with No Personal Income Tax
The following states do not impose personal income tax on wages, so state income tax withholding generally does not apply:
- Alaska
- Florida
- Nevada
- New Hampshire (tax on interest and dividends was repealed effective January 1, 2025)
- South Dakota
- Tennessee
- Texas
- Washington (does have a capital gains tax for certain high earners)
- Wyoming
Federal Tax Exemption
Being exempt from state income tax does not make an individual exempt from federal income tax. An employee may claim exemption from federal income tax withholding on Form W-4 if they:
- Had no federal income tax liability for the prior tax year, and
- Expect to have no federal income tax liability for the current tax year.
To claim the exemption, an employee must fill out a federal W-4 form and, if applicable, a state-specific form. The completed W-4 must be submitted to Justworks as a paper form — federal exemptions cannot be processed through the in-app submission process. The federal exemption must be renewed by February 15 of each year. If a new W-4 claiming exemption is not submitted by that date, Justworks will begin withholding as if the employee is single or married filing separately with no adjustments.
How to Renew Tax Exemptions
Note: The in-app renewal process described below applies to eligible state tax exemptions only. Federal (W-4) exemptions and New York state exemptions require paper forms and cannot be renewed through the in-app process — see the Federal Tax Exemption section and the New York-specific instructions above.
If you are required to renew your exemption, you will receive an email notification approximately 30 days before your renewal deadline.
After logging in, you will see an alert on the home page prompting you to renew your tax exemption. Clicking Review pulls up a PDF that you can fill out and sign in-app.
The PDF is pre-populated with your personal details and only requires you to confirm the reason for your tax exemption (in states with more than one reason) and digitally sign.
You will continue receiving reminder emails until you either submit the renewal or the renewal deadline passes.
If you do not renew your exemption by the deadline, your withholding will be updated based on default tax withholding rules.
If you believe you still qualify and missed the deadline, please reach out to Support via email at support@justworks.com.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.