Remote Work and State Taxes — Which State Taxes Your Income?

Remote work has created a tax gray zone. If your employer is in New York but you work from home in New Jersey, which state taxes your income? The answer is complicated — and in some cases, both states claim the right to tax you. Over 15 million Americans now work remotely in a different state from their employer, and the rules haven't fully caught up.

See your state tax liability with the State Income Tax Calculator.

The General Rule

Scenario	Where You're Taxed
Live and work in the same state	That state only
Work in-office in a different state from home	Both states (credit in home state)
Work 100% remotely from home state	Home state only (usually)
Work remotely, employer in "convenience of employer" state	Potentially both states
Digital nomad (no fixed state)	Depends on domicile and 183-day rules

The complication arises from a handful of states that use the "convenience of the employer" rule — taxing income based on where the employer is located, not where the employee works.

"Convenience of the Employer" States

These states tax remote workers even if they never set foot in the state, if their employer is headquartered there:

State	Rule	Impact
New York	Convenience of employer	NY taxes you unless you work remotely because the employer requires it (not your preference)
Connecticut	Convenience of employer (modified)	CT taxes, but provides credit for taxes paid to other states
Delaware	Convenience of employer	Similar to NY
Nebraska	Convenience of employer	Applied in some cases
Pennsylvania	Reciprocal agreements	Has agreements with 6 neighboring states

Example: You live in New Jersey and work remotely for a New York employer. Under NY's convenience rule, NY taxes your full income (since you work remotely for your convenience, not the employer's requirement). You also owe NJ taxes. NJ provides a credit for NY taxes paid, but depending on rates, you may still pay more total tax than if you worked in just one state.

State Reciprocal Agreements

Some neighboring states have agreements that simplify things for cross-border workers:

State Pair	Agreement
PA ↔ NJ, OH, MD, VA, WV, IN	Only taxed in state of residence
VA ↔ DC, MD, WV, KY, PA	Only taxed in state of residence
IL ↔ IA, KY, MI, WI	Only taxed in state of residence
DC ↔ All states	DC only taxes DC residents

With a reciprocal agreement, you file in your home state only. Your employer withholds for your home state instead of the work state.

How to Handle Remote Work Taxes

Step 1: Determine your domicile (permanent home state). This is usually where you vote, have your driver's license, and intend to return.

Step 2: Check if your employer's state has a convenience of employer rule. If yes, you may owe taxes in both states.

Step 3: File a resident return in your home state (full income) and a non-resident return in the employer's state if required.

Step 4: Claim a credit on your home state return for taxes paid to the employer's state to avoid double taxation.

What Remote Workers Should Do

Action	Why
Track days worked in each state	Some states use day-counting to allocate income
Keep records of your work location	In case of audit
Update your W-4 for correct state withholding	Prevent over/under-withholding
Inform HR of your work state	Employer may need to register in your state
Consult a tax professional for multi-state situations	State tax interactions are complex

If you've relocated permanently to a new state for remote work, make sure your employer updates their records and withholds for the correct state. Some employers are unwilling to register in new states for a single employee — which creates a personal tax obligation for you.

For all state rates, see State Income Tax Rates 2026. For moving-related tax questions, read State Tax After Moving. And for understanding how state and federal taxes combine, check State vs Federal Tax.