Congress moves to strip states of tax revenue from remote workers
S. 1443 — Mobile Workforce State Income Tax Simplification Act of 2025 · Filed by John Thune (R-SD) · 2 cosponsors · Introduced Apr 10, 2025 · Referred to committee
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What it does
This bill limits which states can tax workers who perform jobs in multiple states. Under current law, states can tax income earned within their borders regardless of where the worker lives. This bill would allow only two states to tax a mobile worker's income: their home state, and any state where they work more than 30 days in a calendar year. It also shields employers from penalties if they rely on employees' self-reported work locations, unless the employer has actual knowledge of fraud.
Why we flagged it
The bill's core function is to restrict state taxing authority over multi-state workers by establishing a bright-line rule (home state + 30-day threshold). It is a federalism measure that reallocates tax jurisdiction, not a traditional tax cut or subsidy, though it will reduce tax revenue for some states.
What the text implies
- States with large remote-work populations or commuter inflows (e.g., New York, California, Illinois) will experience significant income-tax revenue loss, potentially forcing tax increases on residents or service cuts.
- The 30-day threshold creates a cliff effect: an employee working 29 days in a state owes no tax there, but 31 days triggers full state income tax liability, creating perverse incentives around scheduling.
The full analysis lists 5 implications of this text.
Who stands to gain
Mobile and remote workers (especially high-income earners); Employers with multi-state workforces (reduced compliance and withholding burden); States with large resident populations working remotely (home-state tax base protected)