Remote Workers: Which State is Taxing Your Income?

Working remotely sounds simple until tax season rolls around. If you're remote or a digital

nomad, the state that gets to tax your income isn't always obvious.

The General Rule

The general rule is that employees owe state income taxes to the state where they live and work. If those two states are different, figuring out an employee's tax obligation can get more complicated. Oyster

For most remote workers, this means you pay taxes to the state where you're physically

working, not where your company is headquartered. Live in Texas, work for a company in California? You're generally taxed by Texas (which happens to have no state income tax).

The "Convenience of the Employer" Rule

Here's where things get tricky. Five states tax people where their employer's office is located, even if they work remotely and never set foot in the state. This is called the "convenience of the employer" rule. Tax Foundation

States with this rule include New York, which is one of the strictest enforcers. If a nonresident works remotely outside of New York for their own convenience, they still owe

New York state income tax. The other states with this rule are Connecticut, Delaware, Nebraska, and Pennsylvania. Shay CPA

So if your employer is based in New York but you work from your apartment in Florida, New York may still want a piece of your paycheck unless your employer requires you to work remotely.

States With No Income Tax

If you live in one of these states, you don't owe state income tax on your wages:

• Alaska

• Florida

• Nevada

• South Dakota

• Tennessee

• Texas

• Washington

• Wyoming

  
  

New Hampshire also has no tax on W-2 wages (it previously taxed interest and dividends, but that ended in 2025).

The Double Taxation Problem

If you live and work in two different states, you could get taxed in both. Thankfully, every state with an income tax offers a credit for taxes paid to another state. But the credit won't always make you whole. If the second state has higher rates, you'll end up paying more than if you worked exclusively from your home state. Tax Foundation 

Why This Matters for Day Tracking

Depending on how much time an employee spends working in a different state or country, they may qualify as a resident and become subject to different tax obligations than they would in the place they call "home." Rippling

If you travel for work, split time between two states, or work from different locations throughout the year, tracking where you spend your days isn't just helpful. It determines which states can claim you as a resident and tax your income accordingly.

The Bottom Line

Remote work gives you flexibility, but it also creates tax complexity. Know where your employer is based, understand whether any "convenience" rules apply to you, and keep track of where you actually spend your time.

iReside makes this easy. The app automatically tracks which state you're in each day, so you always have a clear record of where you worked and for how long