Here’s what HIVE AI had to say about “Which states tax remote workers differently in 2025?”:
States that tax remote workers differently in 2025
Nebraska: new “convenience of the employer” threshold
- Nebraska modified its “convenience of the employer” rule for employer withholding on remote employees who primarily work outside Nebraska. Starting January 1, 2025, a remote employee of a Nebraska-based employer can be physically present in Nebraska up to seven days before the state’s convenience-of-the-employer withholding requirement applies. This is a notable change in how Nebraska treats remote workers for sourcing and withholding in 2025 1
Alabama: assertion of tax on out‑of‑state remote work
- Alabama authorities have taken the position that out‑of‑state workers performing services remotely for Alabama employers can owe Alabama income tax on those wages; the Tax Foundation highlights an Alabama Tax Tribunal decision to this effect, reflecting a stricter posture toward remote work sourcing 2
Arkansas: prior reform affecting nonresidents
- Arkansas enacted SB 484 (2021), which the Tax Foundation flags in its review of nonresident income tax rules; Arkansas is among the states that have updated how they treat nonresident and remote worker sourcing in recent years (contextual to 2025 filing) 2
Colorado: filing duty for nonresidents with CO‑source income
- Colorado requires nonresidents to file if they have Colorado‑source income or incur Colorado individual income tax liability, which can capture remote work treated as Colorado‑sourced; this remains relevant to remote workers in 2025 2
What this means for remote workers
- Rules vary widely by state. Nebraska’s 2025 change creates a seven‑day in‑state threshold before the convenience rule triggers withholding for remote staff of Nebraska employers, while Alabama has asserted tax on out‑of‑state remote workers tied to Alabama. Arkansas and Colorado illustrate that states can set different filing and sourcing standards that may affect nonresidents working remotely for in‑state companies 1
Practical next steps
- If you work remotely for a Nebraska employer, track any in‑state days; after seven Nebraska days in a year, employer withholding under the convenience rule can apply for 2025 1
- If you have Alabama ties (employer or customers), review whether Alabama may treat your wages as Alabama‑sourced, even if you worked out of state 2
- If you do remote work connected to Colorado, confirm whether any portion is Colorado‑sourced requiring a nonresident return 2
If you share your resident state, employer’s state, and where you physically work, I can map your 2025 filing and withholding exposure state by state.
Sources
1 – Tax Foundation 📄 Summarize
2 – Tax Foundation 📄 Summarize
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