Reprinted from Tax Notes State
A common argument among policymakers during the pandemic was whether remote work would become the new normal for office jobs or a temporary fad. Both sides of that debate were wrong: While most jobs in which remote work is possible do not look like they did in 2020, neither have they returned to the pre-pandemic norm.
Rather, the most common mode in remote-capable occupations is now hybrid work, narrowly outpacing fully remote and fully on-site work styles combined.1 Just 21 percent of workers who can work remotely never do, compared with 60 percent before the pandemic.
Tax Implications
While convenient for avoiding commutes, working remotely can be less so when it comes to state income taxes. When a taxpayer works remotely in a different state than their office’s location or travels to another state for a conference, sales meeting, construction project, or another reason, their tax filing obligations often become more complicated.
In 22 of the 41 states with an income tax, a single day of work in that state — no matter how much income is earned — obliges the taxpayer to file a tax return. Life gets more complicated for employers as well: In 15 states, employers must withhold income taxes if an employee works a single day there.2
When enforced, the cost of compliance is often more burdensome than the amount of tax paid. In many cases, the cost to add another state return to one’s TurboTax or H&R Block return can exceed the actual amount of tax paid. This can become even more extreme for taxpayers who work in multiple states. For employers, the additional accounting hassle can be the deciding factor between states when it comes to hosting retreats and conferences or taking on short-term economic opportunities.
States can make life worse for remote workers in other ways as well. The seven states with convenience of the employer rules require taxpayers who switch from working in state to out of state for the same in-state employer to continue paying income tax, even if they never set foot in the state. This illogical, unfair requirement exposes taxpayers to the risk of double taxation as they are caught in a tug-of-war between state tax departments.
Fortunately, states have tools available to minimize these unnecessary burdens. States can adopt safe harbors exempting nonresidents (and their employers) from income tax obligations until they spend more than 30 days working in that state. These safe harbors not only protect taxpayers from nuisance tax obligations, but also help revenue departments avoid wasting time enforcing and processing small-dollar returns. Moreover, convenience of the employer rules can be repealed. Lastly, reciprocity agreements between states simplify cross-border tax compliance by designating all income earned in either state as taxable only in the taxpayer’s state of residence.
State Legislative Updates
The National Taxpayers Union Foundation’s Remote Obligations and Mobility (ROAM) Index provides a holistic metric of the individual income tax compliance burdens that states place on nonresidents and their employers, ranking each state based on the degree to which it has implemented policies enumerated in the previous paragraph. The nine states without an individual income tax are tied for first place in the ROAM Index, as they have no compliance obligations.
Eight states passed or considered legislation to change their standing on the ROAM Index over the past year. A breakdown of recent legislative activity on remote work in the states follows.
Alabama
Few states were more in need of reform than Alabama, which ranked second to last on the previous ROAM Index. Alabama imposed tax obligations on nonresident individuals and employers alike from the very first day they worked in Alabama and applied a convenience of the employer rule conceived by the Department of Revenue.
In May Alabama Gov. Kay Ivey (R) signed into law H.B. 379, which aimed to address some of these shortcomings. H.B. 379 establishes new safe harbors for individuals and employers, protecting each from compliance obligations until the taxpayer exceeds 30 days of work in Alabama.
However, these new thresholds came with a key asterisk: They apply only to residents of states without an individual income tax or that have a “substantially similar exclusion.” While these mutuality requirements are intended to encourage other states to adopt safe harbors, in practice they do little more than limit the benefit of safe harbors to residents of just a few states.
Worse, H.B. 379 failed to address the state’s convenience of the employer rule, leaving Alabama uniquely inhospitable to taxpayers in the region. Employers also have good reason to be concerned about that rule, not just because of additional withholding complexity, but also because prospective hires may be leery of working in a state that may subject them to double taxation if they switch to remote work.
For all these reasons, H.B. 379 improved Alabama’s ROAM Index ranking far less than it could have. Alabama now stands at a modest 35th out of 50 but could have been 12th had it repealed its convenience of the employer rule and not included the mutuality requirement.3
Louisiana
Alabama need look no further than Louisiana for a template for improvement. Louisiana ranks 28th on the ROAM Index, with 25-day thresholds for its nonresident filing and withholding safe harbors and a similar mutuality requirement to the one Alabama just instituted.4 When H.B. 567, passed earlier this year, takes effect in January 2026, Louisiana will be 12th — or third highest among states with an individual income tax.
H.B. 567 initially included a minor positive change adjusting its 25-day threshold (a number unique to Louisiana) to the more common 30 days. But under the DOR’s advice, the Senate version of the bill was updated to eliminate the state’s mutuality requirement as well. Louisiana will join Indiana, Illinois, and Montana as the only states with 30-day filing and withholding thresholds and no mutuality requirements.
Nebraska
Nebraska L.B. 1023, the broader tax and revenue package approved in April 2024, included minor adjustments to the state’s tax treatment of nonresident workers. This tax package instituted new income tax filing and withholding safe harbors, but far less generous ones than the 30-day thresholds proposed by Sen. Eliot Bostar under an earlier bill.5
Instead, L.B. 1023 included new safe harbor thresholds of seven days or $5,000 in wages — exceeding either of which would incur compliance obligations. L.B. 1023 also applied these thresholds to the state’s convenience of the employer rule, meaning that Nebraskans who switch to working remotely in another state for the same Nebraska-based employer incur Nebraska tax compliance obligations only if they exceed either threshold while physically working in Nebraska. This protects nonresidents who are exclusively remote, but not those who travel to Nebraska more than once every two months.
These changes benefit a marginal number of nonresidents but are so limited in scope that they have no practical effect for most individuals and businesses burdened by tax obligations. Even aside from how low the thresholds are, dual wage- and day-based thresholds are not advisable. Day-based thresholds are more intuitive than wage-based thresholds, because even workers earning a regular salary find it difficult to translate “days worked” in a state to “income earned.” Attaching a wage-based threshold to a day-based threshold defeats the purpose and simplicity that a day-based threshold offers.
Taken together, these changes raised Nebraska from 48th on the ROAM Index to just 43rd.
Other Proposals
Legislation was introduced in Kansas,6 Minnesota,7 and Oklahoma8 to implement filing and withholding safe harbors with 30-day thresholds,9 but none passed either chamber. And Arkansas H.B. 1116 would have introduced a $2,500 wage-based safe harbor threshold for individual filing and a 15-day safe harbor threshold for withholding.
While no new income tax reciprocity agreements have been entered into for many years, they are receiving renewed interest. Arkansas H.B. 1116 would have established authority for the Department of Finance and Administration to enter into income tax reciprocity agreements, which to this point no state south of Kentucky has entered into. And Wisconsin Act 147, approved in March 2024, convenes a study on the effects of renewing the reciprocity agreement that existed between Wisconsin and Minnesota until 2010.
Federal Preemption Looms
The ultimate solution to this confusing patchwork of different state rules about how long a nonresident must work in the state before becoming liable for tax may end up coming from Congress. The Mobile Workforce State Tax Simplification Act has been introduced in past sessions, but its principal Republican champion, Sen. John Thune, R-S.D., is now Senate majority leader. This legislation passed the House in 2017 by voice vote and had a bipartisan group of 61 cosponsors that year in the Senate,10 but did not receive a floor vote.
With Thune holding the reins, he — along with Senate Finance Committee member Catherine Cortez Masto, D-Nev. — has reintroduced this bill as S. 1443. Given its history of bipartisan support, it is one of the few proposals in Washington that may not even need the lower vote threshold of a reconciliation package to get through the Senate.
Conclusion
Seventeenth-century French statesman Jean-Baptiste Colbert once famously summed up taxation as “the art of plucking the goose so as to get the most feathers with the least hissing.” As state budgets continue to tighten, the temptation to view nonresidents as a hiss-free revenue source (or rather a source of hissing that’s easy to ignore) will only become stronger. But a significant reason we refer to our Constitution rather than our Articles of Confederation today is the Founding Fathers’ realization that states targeting each others’ residents for easy revenue quickly devolves into a circular firing squad.
Instead, states should ensure that remote workers and businesses are not dissuaded from pursuing short-term economic opportunities by something as mundane as paperwork. After all, the tax revenue collected from a business that decides not to do business in your state because the juice is not worth the squeeze is always zero dollars.
1 Gallup, “Indicators: Hybrid Work” (undated).
2 Andrew Wilford, “Which States Are Best for Remote Workers? 2025 Remote Obligations and Mobility (ROAM) Index,” National Taxpayers Union Foundation (July 16, 2025).
3 Wilford, “Alabama Passes Mobile Workforce Legislation, but Much More Work to Be Done,” National Taxpayers Union Foundation (June 10, 2025).
4 This is another problem with mutuality requirements. Whether another state’s safe harbor is “substantially similar” is always up to interpretation, and it would have been unclear if Louisiana’s 25-day safe harbor was substantially similar to Alabama’s. The only way to untangle these questions would be for taxpayers to figure it out themselves, defeating the purpose of safe harbors intended to make short-term work not entail administrative complications.
5 Nebraska L.B. 173 (2023).
6 Kansas H.B. 2420 (2023).
7 Minnesota S.F. 46 (2025).
8 Oklahoma S.B. 1500 (2024).
9 Kansas H.B. 2420 contained a mutuality requirement. Oklahoma S.B. 1500’s safe harbor would also have included a $20,000 threshold; though higher than any other state’s wage threshold, this proposal suffers from the same problems noted earlier about combined day- and wage-based thresholds.
10 H.R. 1393 (2017); S. 540 (2017).