S.1443 - Mobile Workforce State Income Tax Simplification Act of 2025 (119th Congress)
Summary
The Mobile Workforce State Income Tax Simplification Act of 2025 (S.1443) aims to limit the authority of states to tax the income of employees who perform work in multiple states. It proposes that wages earned by an employee working in more than one state should only be subject to income tax in the state of residence and the state where the employee works for more than 30 days during the calendar year. The bill also addresses withholding and reporting requirements, employer responsibilities, and definitions of key terms.
Expected Effects
If enacted, this bill would simplify state income tax compliance for mobile workers and their employers. It would reduce the complexity and potential for double taxation that currently exists when employees work in multiple states. This could lead to reduced administrative burdens for businesses and greater clarity for employees regarding their tax obligations.
Potential Benefits
- Simplified Tax Compliance: Reduces the complexity of filing state income taxes for employees who work in multiple states.
- Reduced Administrative Burden: Eases the burden on employers by standardizing withholding and reporting requirements.
- Clarity for Employees: Provides clear rules about which states can tax their income.
- Potential for Reduced Double Taxation: Minimizes the risk of being taxed by multiple states on the same income.
- Increased Mobility: May encourage greater workforce mobility by removing tax-related disincentives.
Potential Disadvantages
- Reduced State Revenue: States with a significant influx of short-term mobile workers may experience a decrease in tax revenue.
- Complexity in Tracking: Employers may still face challenges in accurately tracking employee work locations and days worked.
- Potential for Abuse: The reliance on employee self-reporting could create opportunities for tax evasion, despite provisions addressing fraud and collusion.
- Exclusion of Certain Professions: The exclusion of professional athletes, entertainers, and certain public figures could be seen as unfair or discriminatory.
- Increased Burden on Resident States: States with large resident populations of mobile workers may see an increase in demand for state services without a corresponding increase in tax revenue from those workers' out-of-state earnings.
Constitutional Alignment
The bill's alignment with the US Constitution primarily concerns the balance of power between the federal government and the states, particularly regarding interstate commerce and taxation. While the Constitution grants Congress the power to regulate interstate commerce (Article I, Section 8), the Tenth Amendment reserves powers not delegated to the federal government to the states. This bill seeks to limit state taxing authority, potentially raising questions about the scope of federal power over state fiscal matters. However, proponents could argue that simplifying state income tax for mobile workers facilitates interstate commerce, thus justifying federal intervention. The bill does not appear to infringe on individual rights enumerated in the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).