Title 5, Government Organization and EmployeesRelease 119-110
§5517 Withholding State Income Taxes
Title 5 › PART III — EMPLOYEES › Subpart D — Pay and Allowances › CHAPTER 55 — PAY ADMINISTRATION › SUBCHAPTER II — WITHHOLDING PAY › § 5517
Summary
When a State law makes employers collect state income tax from workers who live in that State or lets employers do so if the worker asks, the Secretary of the Treasury must make an agreement with that State within 120 days after the State asks. The agreement requires each U.S. agency to follow the State’s withholding rules for agency employees whose regular federal job location is in that State. For military pay, the rule applies to service members who are residents of the State. The United States won’t accept rules that are harsher on the federal government than on other employers, and agencies can’t take money from a State to do the withholding. "State" means a State, territory, possession, or commonwealth. For this rule and sections 5516 and 5520, “service as a member of the Armed Forces” also covers National Guard duty under 32 U.S.C. 502 and Ready Reserve training under 10 U.S.C. 10147.
Full Legal Text
Title 5, §5517
Government Organization and Employees, Source: USLM XML via OLRC
(a)When a State statute—
(1)provides for the collection of a tax either by imposing on employers generally the duty of withholding sums from the pay of employees and making returns of the sums to the State, or by granting to employers generally the authority to withhold sums from the pay of employees if any employee voluntarily elects to have such sums withheld; and
(2)imposes the duty or grants the authority to withhold generally with respect to the pay of employees who are residents of the State;
the Secretary of the Treasury, under regulations prescribed by the President, shall enter into an agreement with the State within 120 days of a request for agreement from the proper State official. The agreement shall provide that the head of each agency of the United States shall comply with the requirements of the State withholding statute in the case of employees of the agency who are subject to the tax and whose regular place of Federal employment is within the State with which the agreement is made. In the case of pay for service as a member of the armed forces, the preceding sentence shall be applied by substituting “who are residents of the State with which the agreement is made” for “whose regular place of Federal employment is within the State with which the agreement is made”.
(b)This section does not give the consent of the United States to the application of a statute which imposes more burdensome requirements on the United States than on other employers, or which subjects the United States or its employees to a penalty or liability because of this section. An agency of the United States may not accept pay from a State for services performed in withholding State income taxes from the pay of the employees of the agency.
(c)For the purpose of this section, “State” means a State, territory, possession, or commonwealth of the United States.
(d)For the purpose of this section and section 5516 and 5520, the terms “serve as a member of the armed forces” and “service as a member of the Armed Forces” include—
(1)participation in exercises or the performance of duty under section 502 of title 32, United States Code, by a member of the National Guard; and
(2)participation in scheduled drills or training periods, or service on active duty for training, under section 10147 of title 10, United States Code, by a member of the Ready Reserve.
Legislative History
Notes & Related Subsidiaries
Historical and Revision Notes
DerivationU.S. CodeRevised Statutes andStatutes at Large 5 U.S.C. 84b.
July 17, 1952, ch. 940, § 1, 66 Stat. 765. Sept. 23, 1959, Pub. L. 86–371 “Sec. 1”, 73 Stat. 653. 5 U.S.C. 84c.
July 17, 1952, ch. 940, § 2, 66 Stat. 766. Sept. 23, 1959, Pub. L. 86–371 “Sec. 2”, 73 Stat. 653. In subsection (b), the words “after
March 31, 1959” are omitted as executed. Standard changes are made to conform with the definitions applicable and the style of this title as outlined in the preface to the report.
Editorial Notes
Amendments
1997—Subsec. (c). Pub. L. 105–34 substituted “, territory, possession, or commonwealth” for “or territory or possession”. 1994—Subsec. (d)(2). Pub. L. 103–337 substituted “section 10147” for “section 270(a)”. 1987—Subsec. (d). Pub. L. 100–180 struck out “do not” before “include”. 1976—Subsec. (a). Pub. L. 94–455, § 1207(a)(1), (c), inserted in par. (1) provision relating to the grant to employers of the authority to withhold sums from the pay of employees if any employee voluntarily elects to have such sums withheld, inserted in par. (2) “or grants the authority” after “imposes the duty”, and substituted in text following par. (2) provisions that in the case of pay for service as a member of the armed forces, the preceding sentence shall be applied by substituting “who are residents of the State with which the agreement is made” for “whose regular place of Federal employment is within the State with which the agreement is made” for provision that the agreement may not apply to pay for service as a member of the armed forces. Subsec. (d). Pub. L. 94–455, § 1207(b), added subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date
of 1997 Amendment section 1462(b) of Pub. L. 105–34 provided that: “The amendment made by subsection (a) [amending this section] shall take effect on January 1, 1998.”
Effective Date
of 1994 AmendmentAmendment by Pub. L. 103–337 effective Dec. 1, 1994, except as otherwise provided, see section 1691 of Pub. L. 103–337, set out as an
Effective Date
note under section 10001 of Title 10, Armed Forces.
Effective Date
of 1976 AmendmentAmendment by section 1207(a)(1) of Pub. L. 94–455 applicable to wages withheld after the 120-day period following any request for an agreement after Oct. 4, 1976, see section 1207(f)(1) of Pub. L. 94–455, set out as a note under section 5516 of this title. Pub. L. 94–455, title XII, § 1207(f)(2), Oct. 4, 1976, 90 Stat. 1708, provided that: “The
Amendments
made by subsections (b) and (c) [amending this section] shall apply to wages withheld after the 120-day period following the date of the enactment of this Act [Oct. 4, 1976].”
Executive Documents
Executive Order No. 10407 Ex. Ord. No. 10407, Nov. 7, 1952, 17 F.R. 10132, which related to
Regulations
governing agreements concerning withholding of state or territorial income taxes, was revoked by Ex. Ord. No. 11968, Jan. 31, 1977, 42 F.R. 6787, formerly set out as a note under section 5520 of this title.
Reference
Citations & Metadata
Citation
5 U.S.C. § 5517
Title 5, Government Organization and Employees
Last Updated
Sep 22, 2026
Release point: 119-110