H.R. 10271: Mobile Workforce State Income Tax Simplification Act of 2026

This bill would limit when states can tax the wages of employees who work in more than one state during a year.

What it changes

• If an employee works in multiple states, a state could tax that employee’s wages only if:
  • the employee lives in that state, or
  • the employee is physically in that state and doing work there for more than 30 days during the year.
• If the employee works in a state for 30 days or less, that state generally could not tax the wages earned for that work.

Payroll withholding and reporting

• Employers would not have to withhold or report state income tax for an employee unless that state is allowed to tax the wages under the rules above.
• If an employee crosses the 30-day threshold partway through the year, withholding and reporting for that state would apply starting on the day the employee begins working there.

How work location would be counted

• A “day” would generally count toward a state if the employee does more work in that state than in any other state that day.
• If an employee works in their home state and only one other state on the same day, the nonresident state would be treated as the main work location for that day.
• Time spent traveling would not count as working in a state.

Employer recordkeeping and penalties

• For penalty purposes, an employer could usually rely on the employee’s yearly estimate of where they expect to work.
• That protection would not apply if the employer knows the employee is being fraudulent or if the employer and employee are working together to evade taxes.
• If an employer already keeps location records in the normal course of business, that alone would not stop the employer from relying on the employee’s estimate.
• If the employer chooses to use a daily time-and-attendance system that tracks where the employee works, those system records would control instead of the employee’s estimate.

Who is excluded

• The bill would not apply to professional athletes, professional entertainers, certain film/TV production workers tied to state incentive programs, or certain public figures paid per event.

When it would take effect

• The bill would take effect on January 1 of the second calendar year after it is enacted.
• It would not apply retroactively to tax obligations that arise before that date.

Relevant Companies

None found