S. 1443: Mobile Workforce State Income Tax Simplification Act of 2025

This bill, titled the Mobile Workforce State Income Tax Simplification Act of 2025, aims to regulate how states can tax employees who work in multiple states. Here are the main points:

Key Provisions

• Income Tax Limitations: The wages of employees who perform their job duties in more than one state can only be taxed by:
  • The state where the employee resides.
  • The state where the employee works for more than 30 days during the year.
• State Tax Withholding and Reporting: States cannot require employers to withhold and report state income tax unless the employee is liable for taxation under the above conditions.
• Employer Reliance on Employee Statements: Employers can depend on their employees’ projections regarding how much time they will spend working in different states, with some exceptions for known fraud or collusion.
• Day Definition: An employee is considered to have worked in a state for a day if more of their work is done in that state than elsewhere, with specific rules for employees in transit.

Exemptions

The bill makes certain exemptions, meaning specific categories of workers are not under the jurisdiction of this bill:

• Professional athletes.
• Professional entertainers.
• Qualified production employees (those working in media production).
• Certain public figures performing services on a per-event basis.

Implementation and Effective Date

• The bill will take effect on January 1 of the second calendar year after it is enacted.
• No tax obligations that arise before the effective date will be influenced by this legislation.

Definitions

Key terms in the bill include:

• Employee: Defined by the state where the work is performed, excluding certain exempted categories.
• Employer: Defined generally but may follow state definitions if applicable.
• State: Refers to any of the U.S. states.
• Time and Attendance System: A system for tracking employee work locations for tax purposes.

Relevant Companies

• ADBE (Adobe Inc.): May need to adjust employee tax withholding practices for remote workers in multiple states.
• CRM (Salesforce.com, Inc.): Could face similar challenges regarding employee tax obligations across different states where duties are performed.
• MSFT (Microsoft Corporation): As a large employer with a diverse workforce, will need to align its payroll systems with the new regulations.