41 CFR § 302-17.41 - Applicable State marginal tax rate and effect on the RITA and an employee's State tax return(s).
---
identifier: "/us/cfr/t41/s302-17.41"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "41 CFR § 302-17.41 - Applicable State marginal tax rate and effect on the RITA and an employee's State tax return(s)."
title_number: 41
title_name: "Public Contracts and Property Management"
section_number: "302-17.41"
section_name: "Applicable State marginal tax rate and effect on the RITA and an employee's State tax return(s)."
chapter_number: 302
chapter_name: "RELOCATION ALLOWANCES"
subchapter_number: "F"
subchapter_name: "MISCELLANEOUS ALLOWANCES"
part_number: "302-17"
part_name: "17—TAXES ON RELOCATION EXPENSES"
positive_law: false
currency: "2026-03-24"
last_updated: "2026-03-24"
format_version: "1.1.0"
generator: "[email protected]"
authority: "5 U.S.C. 5724b; 5 U.S.C. 5738; E.O. 11609, 36 FR 13747, 3 CFR, 1971-1975 Comp., p. 586."
regulatory_source: "FTR Case 2025-05, 90 FR 56893, Dec. 8, 2025, unless otherwise noted."
cfr_part: "302-17"
---
# 302-17.41 Applicable State marginal tax rate and effect on the RITA and an employee's State tax return(s).
If two or more States that are involved in an employee's relocation impose an income tax on relocation benefits, then the employee's relocation benefits may be taxed by both States. Most commonly, the old and new duty stations are in the two States involved. The following table lays out the possibilities:
Table 1 to § 302-17.41
| If: | But: | The agency will use the following as the State marginal tax rate in the CMTR: | The RITA will include an appropriate allowance for: | Employee's
action: |
| --- | --- | --- | --- | --- |
| Only one involved State has a State income tax | | The marginal tax rate of the one State that taxes income | Taxes incurred in that State | Pay the taxes required by the State that taxes income. |
| Each involved State taxes a different set of the relocation benefits, with no overlap | | The average of the marginal tax rates for each State involved | Taxes incurred in all involved States | File tax returns in each involved State, and pay the applicable taxes. |
| Two or more involved States tax some of the same relocation benefits | All involved States an adjustment or provide 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 incurred in all involved States | 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 an adjustment or provides a credit for income taxes paid to other States | The sum of all applicable State marginal tax rates | Taxes incurred in all involved States | 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. |