Is income earned abroad subject to state income tax?

I've been working abroad for the last 12 years and make under the limit so that I have not had to pay any taxes. However, I will be moving home this summer, 2008. I know that the income I earn from January 1 until my last pay in June will be subject to federal income tax. Will it also be subject to state income tax? I will probably be living in Louisiana from June until December of 2008.

I will also receive a relocation allowance when I move. It is taxed here in China. Will I have to claim it on my income tax?

Thanks, VB. I can't seem to find the specifics on any website. Do you know if the income earned before my return will be taxed at the same rate as the income I will earn while living in the state?

You will file as a part year resident. The time before your arrival will be taken into account on the state return. (That is, the income earned before you returned to Louisiana should not be taked by Louisiana.)

For federal purposes, you will presumably still meet the foreign earned income exlusion test, but will prorate the $87,500. If you arrive back in July you would get roughly 7/12ths. Unfortunately, any income you earn over and above that will be taxed as if the foreign income wasn't excluded. (The IRS used to subtract the top of your income, keeping the lowest tax bracket; now the IRS subtracts the bottom of your income, keeping the highest tax bracket.)