H.R. 10142: Multi-State Worker Tax Fairness Act of 2026

This bill would change federal law to limit how states can tax people who live in one state but work in another, including telecommuters and other workers who perform services across state lines.

What it would do

• A state could tax a nonresident worker’s compensation only for the time that worker is physically present in that state.
• If the worker is physically in another state, the first state could not treat that time as taxable in the first state for nonresident income tax purposes.
• States would also be barred from using “convenience of the employer” rules, or similar rules, to say a worker is present in a state just because they are working from home.

How it would affect work-from-home and multi-state work

Under this bill, if someone lives in one state but does some of their work from home in another state, the tax rules would be based more strictly on where they were actually located when doing the work. A state would not be allowed to count home-office work as if it happened in the other state simply because the employer prefers or requires it.

Rules for how time is counted

The bill also says states cannot reclassify certain periods of time on their own when determining taxable compensation. In general, a state could not decide that a period spent in another state is “nonworking time,” “normal work time,” or unpaid time unless the employer treats it that way.

Who is covered

The bill applies to:

• Nonresident individuals, meaning people who are not residents of the state trying to tax them;
• Compensation such as salaries, wages, and similar pay;
• People working as employees or independent contractors.

What it would not change

• It would not affect state tax laws other than income taxes.
• It would not change how states tax corporations, partnerships, trusts, estates, LLCs, or other entities.
• It would not change taxes on income like dividends, interest, rents, royalties, or other unearned income.

When it would take effect

The changes would take effect as soon as the bill becomes law.

Relevant Companies

None found