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1 Katherine Loughead, State Individual Income Taxes on Nonresidents: A Primer 1 (2025)

handle is hein.taxfoundation/steidvlic0001 and id is 1 raw text is: *%TAX FOUNDATION State Individual Income Taxes on Nonresidents: A Primer Katherine Loughead Senior Policy Analyst & Research Manager January 2025 Key Findings * Five years after the start of the COVID-19 pandemic, remote and hybrid work has become a way of life for many Americans. * Even occasional remote or hybrid work, or work-related travel, triggers nonresident individual income tax filing, withholding, and payment obligations in many states. * States' nonresident income tax laws are highly complex and nonneutral. * Unless substantial revenue is at stake, individuals, employers, and state revenue officials have little incentive to comply with or enforce overly aggressive nonresident income tax policies. * Several states have adopted reforms that provide meaningful relief to taxpayers, but until more states adopt similar reforms, the nonresident income tax landscape will remain burdensome and complex. * More states should adopt nonresident income tax reforms that promote simplicity and neutrality. * Among the most valuable reforms to consider are day-based filing and withholding safe harbor thresh- olds and reciprocity agreements. * States should also consider repealing existing convenience rules and not applying local income taxes to nonresidents. The Tax Foundation is the world's leading nonpartisan tax policy 501 (c)(3) nonprofit. For over 80 years, our mission has remained the same: to improve lives through tax policies that lead to greater economic growth and opportunity. TAX FOUNDATION 1325 G STREET, NW, SUITE 950, WASHINGTON, DC 20005 202-464 6200 1 taxfoundation.org