S 1443
Mobile Workforce State Income Tax Simplification Act of 2025
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Bill overview
This bill, the Mobile Workforce State Income Tax Simplification Act of 2025, aims to limit the ability of states to tax the income of employees who work in multiple states. Generally, an employee’s income will only be taxed by the state where they live or the state where they perform more than 30 days of work during the calendar year. The bill includes specific rules for determining when an employee is considered present in a state and clarifies how employers can rely on employee estimates of work location, with exceptions for detailed time and attendance systems. It also defines key terms related to the mobile workforce and clarifies the role of states in income tax withholding.
Key provisions
- Income tax withholding and reporting requirements apply only if an employee is subject to state income tax under the bill’s rules.
- An employee is considered present in a state for a day if they perform more of their employment duties in that state than in any other state during the day.
- Employers can rely on an employee’s estimate of work location, unless a detailed time and attendance system is used.
- Time and attendance systems override employee estimates for determining work location.
- The bill defines key terms such as ‘professional athlete,’ ‘professional entertainer,’ and ‘qualified production employee’ to clarify which workers are covered.
- States can limit the definition of ‘wages or other remuneration’.
- The Act takes effect on January 1 of the second calendar year following its enactment.
- The Act does not apply to tax obligations that accrued before its effective date.
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119th CONGRESS — 1st Session
S. 1443
IN THE SENATE OF THE UNITED STATES
A BILL
To limit the authority of States to tax certain income of employees for employment duties performed in other States.
This Act may be cited as the Mobile Workforce State Income Tax Simplification Act of 2025
.
No part of the wages or other remuneration earned by an employee who performs employment duties in more than one State shall be subject to income tax in any State other than—
the State of the employee’s residence; and
the State within which the employee is present and performing employment duties for more than 30 days during the calendar year in which the wages or other remuneration is earned.
Wages or other remuneration earned in any calendar year shall not be subject to State income tax withholding and reporting requirements unless the employee is subject to income tax in such State under subsection (a). Income tax withholding and reporting requirements under subsection (a)(2) shall apply to wages or other remuneration earned as of the commencement date of employment duties in the State during the calendar year.
For purposes of determining penalties related to an employer’s State income tax withholding and reporting requirements—
an employer may rely on an employee’s annual determination of the time expected to be spent by such employee in the States in which the employee will perform duties absent—
the employer’s actual knowledge of fraud by the employee in making the determination; or
collusion between the employer and the employee to evade tax;
except as provided in paragraph (3), if records are maintained by an employer in the regular course of business that record the location of an employee, such records shall not preclude an employer’s ability to rely on an employee’s determination under paragraph (1); and
notwithstanding paragraph (2), if an employer, at its sole discretion, maintains a time and attendance system that tracks where the employee performs duties on a daily basis, data from the time and attendance system shall be used instead of the employee’s determination under paragraph (1).
For purposes of this Act:
Except as provided in subparagraph (B), an employee is considered present and performing employment duties within a State for a day if the employee performs more of the employee’s employment duties within such State than in any other State during a day.
If an employee performs employment duties in a resident State and in only one nonresident State during one day, such employee shall be considered to have performed more of the employee’s employment duties in the nonresident State than in the resident State for such day.
For purposes of this paragraph, the portion of the day during which the employee is in transit shall not be considered in determining the location of an employee’s performance of employment duties.
The term employee has the same meaning given to it by the State in which the employment duties are performed, except that the term employee
shall not include a professional athlete, professional entertainer, qualified production employee, or certain public figures.
The term professional athlete means a person who performs services in a professional athletic event, provided that the wages or other remuneration are paid to such person for performing services in his or her capacity as a professional athlete.
The term professional entertainer means a person of prominence who performs services in the professional performing arts for wages or other remuneration on a per-event basis, provided that the wages or other remuneration are paid to such person for performing services in his or her capacity as a professional entertainer.
The term qualified production employee means a person who performs production services of any nature directly in connection with a State qualified, certified or approved film, television or other commercial video production for wages or other remuneration, provided that the wages or other remuneration paid to such person are qualified production costs or expenditures under such State’s qualified, certified or approved film incentive program, and that such wages or other remuneration must be subject to withholding under such film incentive program as a condition to treating such wages or other remuneration as a qualified production cost or expenditure.
The term certain public figures means persons of prominence who perform services for wages or other remuneration on a per-event basis, provided that the wages or other remuneration are paid to such person for services provided at a discrete event, in the nature of a speech, public appearance, or similar event.
The term employer has the meaning given such term in section 3401(d) of the Internal Revenue Code of 1986, unless such term is defined by the State in which the employee’s employment duties are performed, in which case the State’s definition shall prevail.
The term State means any of the several States.
The term time and attendance system means a system in which—
the employee is required on a contemporaneous basis to record his work location for every day worked outside of the State in which the employee’s employment duties are primarily performed; and
the system is designed to allow the employer to allocate the employee’s wages for income tax purposes among all States in which the employee performs employment duties for such employer.
The term wages or other remuneration may be limited by the State in which the employment duties are performed.
This Act shall take effect on January 1 of the second calendar year that begins after the date of the enactment of this Act.
This Act shall not apply to any tax obligation that accrues before the effective date of this Act.