Professional athletes are often forced to pay income tax to every state they’ve visited—a little-known rule that could come into play for remote workers.
- “Jock tax” is the fee professional athletes often have to pay to every city or state they visit during their season.
- Other professionals who travel—like travel nurses or freelance graphic designers—aren’t subject to a similar tax because there’s no easy way to track where an individual travels and works during the year. Athletes, however, are on TV while working in different cities and states.
- This tax often goes unnoticed, but with more workers taking advantage of remote-work benefits, something similar to the jock tax could come into play for more people.
- In addition to the $13,900,000 in federal taxes and $5 million in California state taxes that Golden State Warrior basketball star Steph Curry was subject to on his $37,457,000 salary during his 2019 season, he was subject to an additional $945,000 in state jock taxes to 17 other states and one Canadian province.
Why it’s news
With more workers traveling across the country due to the flexibility of remote work, a tax similar to the jock tax could be imposed on remote workers. As far back as 1990, Philadelphia attempted to tax athletes, doctors, and lawyers who visited the city for work.
Already, half of the U.S. states that charge income tax collect taxes from visitors who work for at least one day in the state. Others only tax visitors if they work in the state for a set period of time, ranging from days to weeks.
Typically, states only go after high-income earners with trackable schedules, like athletes, because it would be too difficult to track the average remote worker. However, with the number of remote workers multiplying over the last several years, states could start to change their approach.
This tax method isn’t necessarily a greedy grab for more income tax. States could potentially lose money that would otherwise be gained from permanent residents’ income tax if major businesses start hiring out-of-state workers. Taxing out-of-state visitors could be one way for states to recoup their losses.
It’s unlikely states would tax visitors who only stop in the state for a few days, but visitors who stay longer could be fair game. States could even regulate that big businesses need to track the general location of their employees for tax purposes, The Hustle reports.
Legislation to protect remote workers has been considered before, but the bills have often stalled in Congress. However, the growing number of remote workers could force Congress to pay closer attention.
Mobile Workforce Coalition is one of several organizations asking Congress to intervene on the federal level by imposing a 30-day grace period for any remote worker visiting another state.