Federal law strips states of power to tax wages earned within their borders

What it does

This bill prevents states from taxing wages earned by employees who work in multiple states, except for the employee's home state and any state where they work more than 30 days in a calendar year. It shifts tax authority away from states where work is performed to the employee's residence state, potentially reducing state tax revenue while simplifying compliance for multi-state workers and their employers.

Why we flagged it

The bill's core mechanism is a federal override of state tax authority over wages earned within state borders. It is functionally a preemption statute that reallocates taxing power from work-location states to residence states, not a simplification measure—the title undersells the constitutional and fiscal scope.

What the text implies

• States that are net importers of workers (e.g., major employment hubs like New York, California, Texas) will lose significant tax revenue; states that are net exporters of workers (e.g., lower-cost-of-living states) will gain revenue—creating a hidden fiscal redistribution among states.
• The 30-day threshold creates a cliff incentive: employers may structure assignments to keep workers just under 30 days in any non-resident state to minimize withholding obligations, potentially fragmenting work schedules.
• Professional athletes, entertainers, and production workers are explicitly carved out and remain subject to state taxation where services are performed—creating a two-tier system where high-income performers retain state tax exposure while ordinary workers gain relief.
• Reliance on employee self-reporting of work location (absent employer fraud or collusion) creates audit and enforcement challenges for states and may incentivize underreporting of days worked in high-tax states.
• The bill does not address federal income tax treatment or coordination with state-federal tax treaties, potentially creating conflicts in multi-state tax administration.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Multi-state workers and employers gain tax simplification and reduced compliance burden, but states lose revenue that funds schools, infrastructure, and services—costs borne by remaining taxpayers and residents. The bill creates winners (mobile workers, employers) and losers (state budgets, immobile residents), with no offsetting federal funding mechanism.

Who stands to gain

• Multi-state employers (reduced withholding compliance and administrative burden)
• Mobile workers (reduced state tax liability in non-residence states)
• Residence states with high concentrations of remote/mobile workers (net tax gain)

Named in the bill

States (taxing authority preempted), Multi-state employers, Mobile employees, Professional athletes, Professional entertainers, Qualified production employees, Internal Revenue Code Section 3401(d)

Where it stands

2 cosponsors: 2 Democrats.

• Apr 10, 2025 — Introduced · Congress.gov: “Introduced in Senate”
• Apr 10, 2025 — Referred to Senate Committee on Finance · Congress.gov: “Read twice and referred to the Committee on Finance”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

2 lobbying clients named this bill on 3 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $18,080,000 in lobbying spend. A filing names 4 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 41% of bills with at least one filing.

John Thune, the sponsor, reported $817,500 in PAC receipts in the 2026 cycle.

• Chamber of Commerce of the U.S.A. — $17,960,000 on 1 filing
• Crowe Llp — $120,000 on 2 filings

Lobbying Disclosure Act filings through Jul 15, 2026. A filing shows who paid to lobby on a bill it names, not what changed.