Code of Federal Regulations Title 41. Public Contracts and Property Management § 41.302–17.42 Which state marginal tax rate(s) does my agency use to calculate the CMTR if I incur tax liability in more than one state, and how does this affect my RITA and my state tax return(s)?

Only one involved state has a state income tax

The marginal tax rate of the one state that taxes income

Taxes you incur in that state

You pay the taxes required by the state that taxes income.

Each involved state taxes a different set of your relocation benefits, with no overlap

The average of the marginal tax rates for each state involved

Taxes you incur in all involved states

You file tax returns in each involved state and pay the applicable taxes.

Two or more involved states tax some of your same relocation benefits

All involved states allow you to adjust or take a credit for income taxes paid to other states

The marginal tax rate of the state that has the highest state income tax rate

Taxes you incur in all involved states

You file tax returns in each involved state, take the appropriate credits and/or adjustments, and pay the applicable taxes.

Two or more involved states tax some of the same relocation benefits

One or more involved states does not allow you to adjust or take a credit for income taxes paid to other states

The sum of all applicable state marginal tax rates

Taxes you incur in all involved states

You file tax returns in each involved state, and pay the applicable taxes. This may result in paying taxes in more than one state on the same relocation benefits.