Federal law shields remote workers from multistate income taxes
H.R. 10142 — Multi-State Worker Tax Fairness Act of 2026 · Filed by Jim Himes (D-CT) · 2 cosponsors · Introduced Aug 24, 2026 · Referred to committee
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What it does
This bill prohibits states from taxing the income of nonresident workers (including remote workers) unless those workers are physically present in the state. It bars states from deeming someone to be 'working' in their state based on home-office convenience tests or employer policies, and requires that compensation be allocated only to periods when the worker is physically present in the taxing state. The bill benefits remote workers and multistate employees by preventing states from claiming tax jurisdiction over their wages when they work from home in another state.
Why we flagged it
The bill's core function is to restrict state taxing authority over nonresident workers' compensation by tying tax jurisdiction to physical presence. It is a federalism measure that preempts state income-tax doctrine, not a tax cut or subsidy—it reallocates taxing power away from states.
What the text implies
- States that currently rely on convenience-of-employer doctrine to tax remote workers' income will lose a revenue source; the fiscal impact on state budgets is not quantified in the bill.
- The bill's definition of 'physical presence' may create disputes over what constitutes presence (e.g., brief visits, layovers, partial days) and could generate litigation over boundary cases.
The full analysis lists 4 implications of this text.
Who stands to gain
remote workers and multistate employees (reduced state tax liability); employers with remote workforces (reduced multistate tax compliance and withholding obligations)