Question 1

What is the 'convenience of the employer' rule?

Accepted Answer

The convenience of the employer rule is a tax policy used by certain states (notably New York, New Jersey, Connecticut, Pennsylvania, Delaware, and Nebraska) that taxes remote workers based on where their employer is located, not where the employee physically works. Under this rule, if you work remotely from another state for a New York employer, New York may still require income tax withholding as if you worked in New York.

Question 2

Do I have to pay taxes in both my employer's state and my resident state?

Accepted Answer

It depends on whether the employer's state has a convenience rule and whether the states have a reciprocity agreement. In most cases, your resident state gives you a credit for taxes paid to another state, preventing true double taxation. However, if both states have high tax rates, you may end up paying the higher of the two rates.

Question 3

How does the tax credit work for remote workers?

Accepted Answer

Most states offer a credit for taxes paid to other states. If your employer's state withholds $5,000 and your resident state tax would be $3,000, you get a credit of $3,000 on your resident return (the lesser of the two). If the situation is reversed, you'd owe the difference to your resident state. The credit prevents paying tax twice on the same income.

Question 4

Which states have convenience of the employer rules?

Accepted Answer

As of 2025, the states with some form of convenience rule include New York, New Jersey, Connecticut, Pennsylvania, Delaware, and Nebraska. Each state's rule has different nuances — for example, New York's is the most strict, while others may have exceptions for certain types of remote work arrangements.

Question 5

What if I work remotely in a state with no income tax?

Accepted Answer

If your resident state has no income tax (like Florida or Texas), you generally owe no state income tax regardless of where your employer is located — unless the employer's state has a convenience rule. In that case, the employer's state may still withhold tax, and you would not get a credit from your no-tax resident state.

Remote Worker State Tax Calculator (2025)

Remote worker tax analysis

New York has a convenience rule

New York

New Jersey

Tax obligation breakdown

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