Sponsors (2)
The bill reduces burdens and uncertainty for many remote and multi‑state workers and their employers by clarifying withholding rules and protecting prior tax liabilities, but it shifts revenue and administrative costs to states, creates audit/liability risks when employers rely on employee estimates, and delays when changes take effect.
Remote and multi‑state workers (and the employers who hire them) avoid being taxed by every state they work in, reducing multi‑state tax burdens on wages.
Employers and workers gain clearer withholding rules (including clarified start dates and reliance on employees' annual time estimates), lowering administrative risk and compliance uncertainty about when state withholding begins.
Taxpayers with existing tax liabilities keep the law that governed those obligations (no retroactive re‑taxation), protecting taxpayers from unexpected retrospective changes.
State and local governments may lose income tax revenue from workers who split time across states, potentially reducing funding for local services.
Workers who actually spend more than 30 days in a nonresident state — and the employers who rely on their self‑reported estimates — face audit, dispute, or liability risk if estimates are inaccurate.
States and certain industries (e.g., film, entertainment, production, athletes/performers) may need new recordkeeping and withholding adjustments for excluded categories, adding administrative complexity and compliance costs.
Based on analysis of 3 sections of legislative text.
Limits state taxation and withholding of wages for multi-state employees to the resident state and nonresident states where the employee works more than 30 days in a year.
Introduced April 10, 2025 by John Thune · Last progress April 10, 2025
Prohibits states from taxing or withholding wages of employees who perform work in more than one state except for the employee’s state of residence and any nonresident state where the employee is physically present and working for more than 30 days in a calendar year. It lets employers rely on an employee’s yearly estimate of how many days they will work in each state for withholding and penalty purposes (unless there is fraud or collusion), and requires the use of daily time-and-attendance system data if the employer maintains one. The rule becomes effective on January 1 of the second calendar year after enactment and does not apply to tax obligations that accrued before that date. The law also defines key terms (day, employee, employer, professional athlete/entertainer, qualified production employee, certain public figures, time-and-attendance system, and state) and allows states to narrow what counts as wages or remuneration.