The House passed Mobile Workforce State Income Tax Simplification Act of 2017 (H.R. 1393) this week, which simplifies state income tax laws for employees who work multiple days per year outside the state of their residence.
Currently, states have different income tax reporting requirements for employees who work part-time in their states. Some require employees who work just a few days a year there to file income tax forms in that state. Businesses must also comply with the states’ varying withholding requirements for their employees’ travel.
The bill, sponsored by Reps. Mike Bishop (R-MI) and Hank Johnson (D-GA) and 57 Republican and Democrat co-sponsors, the legislation, would establish a minimum threshold of 30 days, which means an employee would only be subject to another state’s income taxes if he or she works there more than 30 days per calendar year. An employee’s earnings remain subject to full tax in the state of his or her residence. An employer is also not responsible for withholding on behalf of an employee who is only present in the taxing state for thirty days or fewer.
“The House has taken a major step toward streamlining the state income tax reporting and filing process today,” Bishop said. “By simplifying these requirements across America, we can reduce compliance costs and confusing paperwork for everyone involved. I applaud the House for passing our bipartisan legislation and urge the Senate to join us in supporting our mobile workforce and economy.”
A companion bill (S. 540), sponsored by Sens. John Thune (R-SD) and Sherrod Brown (D-OH), has been introduced in the Senate.
“This is an important bill for Americans who work across multiple states,” Johnson said. “It reflects the needs of businesses throughout the country which benefit from the work Americans do as they contribute to the nation’s economy. This pragmatic bill furthers consistency and business opportunities that will continue to spur our economy.”
The bill is supported by more than 300 organizations across numerous industries.