WeVote
Log In

Bill

Bill

HR 10142

Multi-State Worker Tax Fairness Act of 2026

119th Congress Introduced by Josh Gottheimer and 2 co-sponsors

The bill limits state nonresident income taxes to periods when a worker is physically present in that state, excluding time working elsewhere.

Introduced in House
0
WeVote Research Nonpartisan
Bill Summary · HR 10142

Overview

  • Title: Multi-State Worker Tax Fairness Act of 2026
  • Bill Number: H.R. 10142 (119th Congress, 2nd Session)
  • Introduced: August 24, 2026 by Rep. Himes (with Reps. Pappas and Gottheimer as co-sponsors)
  • Purpose: Amend Title 4 of the United States Code to limit the extent to which states may tax the compensation earned by nonresident telecommuters and other multi-state workers.

Main Purpose and Intent

  • The bill seeks to prevent states from imposing nonresident income tax on compensation earned by individuals who are nonresidents of that state when they are physically present in another state, including those who telecommute or perform work across state lines.
  • It aims to create a uniform standard for determining when a nonresident worker can be treated as physically present in a state for tax purposes, effectively limiting state taxation of compensation during periods spent working remotely or while temporarily present in another state.

Key Provisions

  • Creation of a new section, 4 U.S.C. § 127, establishing a limitation on state taxation of compensation for nonresident telecommuters and other multi-state workers.
  • General rule (a): A state may deem a nonresident to be present in or working in that state for any period only if the nonresident is physically present in that state for that period. The state may not impose nonresident income taxes on compensation for periods when the individual is physically present in another state.
  • Determination of physical presence (b): For physical presence, a state cannot consider a nonresident present merely because they are working at home for convenience or because employer tests (e.g., convenience of the employer) are met.
  • Determination of time periods (c): When determining time periods for which compensation is paid, a state may not treat time spent physically present in another state and performing tasks there as:
    • Time that is not normal work time unless the employer deems it nonworking
    • Nonworking time unless the employer deems it working
    • Time with respect to which no compensation is paid unless the employer deems it compensated
  • Definitions (d): Clarifies terms including State, Income Tax, Income Tax Laws, Nonresident Individual, Employee, Employer, and Compensation, providing their scope for purposes of this section.
  • Clarifications (e): The section does not alter tax treatment beyond income tax laws or affect taxation of entities, or forms of unearned income (dividends, interest, rents, etc.).
  • Effective date (c): The amendments take effect on the date of enactment of the Act.
  • Process: Adds a new item to the table of sections in Chapter 4, U.S. Code, to reflect the new § 127.

Who Would Be Affected

  • Nonresident individuals who work across state lines or telecommute (including those working from home) and whose compensation is subject to state income tax by states other than where they reside.
  • Employers and payroll systems in states considering nonresident withholding for multi-state workers.
  • State tax authorities that administer income tax laws for nonresident workers.

Procedural and Timeline Considerations

  • Status: Introduced and referred to the House Committee on the Judiciary (no further action noted in the provided text).
  • Effective Date: Upon enactment of the Act (retroactive to date of enactment for applicability).
  • The bill would supersede or modify existing state income tax rules for nonresidents by restricting taxation to periods of actual physical presence within the taxing state.

Potential Impacts to Note

  • Taxation: Could reduce or eliminate state-level nonresident income tax liability for periods when a telecommuting or multi-state worker is physically present in another state.
  • Compliance: May require states to adjust how they determine physical presence and allocate taxing rights for nonresident compensation.
  • Clarity for Employers/Employees: Provides a clearer standard for when states can exercise taxation rights over nonresident workers, potentially reducing disputes over “work-from-home” or cross-state telecommuting arrangements.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.