Do I Need to File State Taxes if I Have No Income?

Filing taxes can be confusing, especially if you had no income during the year. Many assume that without earnings, they are exempt from filing state taxes, but this isn’t always the case. State tax laws vary, and factors like residency status or specific types of income may still require a return.

Filing Thresholds and Eligibility

Each state sets its own rules for tax filing, often based on income thresholds that vary by filing status, age, and dependency. While federal law establishes a standard filing requirement, states may have lower thresholds or additional criteria. For example, California requires a single filer under 65 to file if their gross income exceeds $15,008 in 2024. However, even those with no income may need to file to qualify for credits like the California Earned Income Tax Credit (CalEITC), which provides refunds to low-income residents.

Dependency status also affects filing requirements. Many states follow federal guidelines, meaning dependents may need to file if they received unearned income above a certain amount. In 2024, the federal threshold for unearned income requiring a return is $1,250, and states like New York and Illinois use similar benchmarks. Filing may be necessary to claim state tax credits.

Some states require a return if taxes were withheld from a paycheck, even if total income falls below the filing threshold. This is common in states with progressive tax systems, such as Oregon, where low-income earners may be eligible for a refund of withheld taxes.

Determining Residency Status

Residency status determines whether you need to file a state tax return, even with no income. States classify individuals as residents, part-year residents, or nonresidents, each with different tax obligations. Full-year residents typically must file if they meet the state’s criteria, while part-year residents may need to file based on the duration of their stay and any income earned.

Some states, like New York and California, have strict residency rules that consider not just physical presence but also intent. If you maintain a permanent home in a state and spend more than 183 days there, you’re often considered a resident, even if you worked elsewhere or had no earnings.

Domicile also plays a role. Significant ties to a state—such as a driver’s license, voter registration, or property ownership—can classify you as a resident even if you spent most of the year elsewhere. Pennsylvania, for example, presumes residency unless you can prove you’ve established a permanent home in another state.

Types of Income That May Trigger Filing

Certain types of income can require a state tax return even without traditional wages. Investment earnings, such as dividends, interest, and capital gains, are common examples. Many states tax these forms of income, even if they originate from out-of-state sources. In Massachusetts, residents must file if they earn more than $8,000 in interest or dividends.

Retirement distributions also impact filing requirements. Pension payments, withdrawals from a 401(k) or IRA, and Social Security benefits may be taxable depending on the state. While Florida and Texas don’t tax personal income, Connecticut imposes taxes on retirement withdrawals above certain thresholds. If state taxes were withheld from these distributions, filing may be necessary to claim a refund.

Self-employment and gig economy earnings must also be reported. Many states require individuals to file if they have business income, even if minimal. In New Jersey, for example, self-employed individuals with net earnings over $1,000 must file. This applies even to irregular work, such as driving for a rideshare service or selling products online. Since independent contractors don’t have taxes withheld, filing ensures compliance and prevents penalties.

Consequences of Not Filing When Required

Failing to file a required state tax return can result in penalties, interest charges, and legal consequences. Many states impose failure-to-file penalties based on a percentage of unpaid taxes, which accrue monthly until the return is submitted. California, for example, assesses a penalty of 5% per month on unpaid taxes, up to a maximum of 25%. Some states impose a minimum penalty for late filing, such as New York’s $100 charge.

Interest on unpaid taxes compounds daily in most states, increasing the total amount owed. Illinois, for instance, charges 10% annual interest on unpaid state taxes. Even a small balance can grow significantly if left unaddressed.

In some cases, failing to file can trigger an audit or substitute return assessment. If a state tax authority receives information—such as a W-2 or 1099—from an employer or financial institution but no corresponding tax return, they may file a return on the taxpayer’s behalf. These substitute filings often exclude deductions or credits, resulting in a higher tax liability.

How to File With No Income

Even without earnings, filing a state tax return may be necessary or beneficial. The process is similar to filing a standard return but requires attention to ensure all applicable deductions, credits, and exemptions are claimed. Many states offer free e-filing options for low-income individuals.

When completing a return with no income, most states allow taxpayers to enter zero as their total earnings. However, if filing to claim refundable credits—such as the Colorado Cashback Rebate or the New Mexico Low-Income Comprehensive Tax Rebate—it’s important to include any required documentation. Some states also require non-filers to submit a return to maintain eligibility for future benefits, such as property tax relief programs or state-funded healthcare assistance.

If taxes were withheld from a previous job or investment income, filing ensures that any excess payments are refunded. Many states automatically process refunds if a return is submitted, but failing to file can result in forfeiting those funds. Some states impose a statute of limitations on claiming refunds, meaning waiting too long to file could result in losing money that would otherwise be returned.