Mobile Workforce State Income Tax Simplification Act of 2025

This bill limits the authority of states to tax and withhold income from employees who work in multiple states. It generally allows only the employee's state of residence and the state where they work more than 30 days in a calendar year to tax their wages. The bill also provides rules for employers to rely on employee determinations of work location for withholding purposes, with exceptions for fraud, collusion, or employer-maintained daily time and attendance systems.

Sec. 2, Limitations on state withholding and taxation of employee income: No state other than the employee's residence state and the state where the employee is present and works more than 30 days in a calendar year may tax the employee's wages. Wages are not subject to withholding or reporting unless taxable under this rule. Employers may rely on an employee's annual estimate of time spent in each state for penalty purposes, unless the employer knows of fraud or collusion. If the employer maintains a daily time and attendance system, that data must be used instead of the employee's estimate. The section defines key terms: a "day" is based on where the employee performs more duties than any other state, with special rules for transit and for work in only one nonresident state. "Employee" excludes professional athletes, professional entertainers, qualified production employees, and certain public figures. "Employer" is defined by reference to federal law or state law. "Time and attendance system" requires contemporaneous daily recording of work location outside the primary work state.

Sec. 3, Effective date; applicability: The act takes effect on January 1 of the second calendar year after enactment. It does not apply to tax obligations that accrue before that effective date.