The U.S. House passed an important measure backed by the Kentucky Chamber that will simplify the state taxation of employees who travel to work in non-resident states. H.R. 1864, the Mobile Workforce State Income Tax Simplification Act, establishes a 30-day national standard for non-resident withholding of state income taxes.
Currently, states have varying and inconsistent standards for employees to file personal income taxes when traveling to a non-resident state for temporary work periods, and for employers to withhold income taxes for those workers. Kentucky and other states require non-resident tax withholding after just one day of travel, while other states have different standards. In all, 41 states tax non-residents for work performed in their state, subjecting employers and employees to onerous administrative burdens. To ease compliance, H.R. 1864 creates a uniform standard – only non-residents who work more than 30 days in a single state are subject to that state’s income tax.
The bill now moves to the U.S. Senate.