Six jurisdictions apply some form of convenience-of-the-employer rule: Connecticut, Delaware, Nebraska, New Jersey, New York, Pennsylvania. The rule inverts the ordinary sourcing principle. Normally wages are sourced to the state where the work is physically performed. Under a convenience rule, wages are sourced to the employer's state whenever the employee works elsewhere for their own convenience rather than because the employer required it.
The practical consequence is double taxation risk that the employee cannot always escape. The residence state taxes the wages because the employee lives there. The employer's state taxes the same wages because it deems them in-state. The residence state's credit for taxes paid to another state is typically limited to tax on income sourced to that state under the residence state's own rules — and the residence state does not agree that days worked at a kitchen table in its own territory are sourced elsewhere.
How each jurisdiction applies it
| State | Scope |
|---|---|
| Connecticut | Per Circular CT (IP 2026(1)): 'If a nonresident employee performs personal services for employment purposes in Connecticut for 15 days or less, this compensation is not Connecticut-sourced income and is not subject to Connecticut income tax.' If the employee ends up exceeding 15 days, withholding applies retroactively to ALL Connecticut compensation. Tax Foundation separately reports a >$6,000 nonresident filing threshold. |
| Delaware | Withholding required from the first dollar of Delaware-source wages. Delaware applies a convenience-of-the-employer test, so days worked remotely outside Delaware for a Delaware employer may still be sourced to Delaware unless the remote work is required by the employer. |
| Nebraska | Nebraska applies a CONVENIENCE-OF-THE-EMPLOYER rule, softened in 2024. Per the 2026 Nebraska Circular EN: if a nonresident works SEVEN employment duty days or fewer in Nebraska, wages earned outside Nebraska for the employee's own convenience are not subject to Nebraska withholding; once the employee exceeds seven Nebraska days, the convenience rule applies to all such wages. Separately, no withholding is required for a nonresident attending a conference or training in Nebraska who works in multiple states, is present in Nebraska seven days or fewer, AND earns $5,000 or less for Nebraska work. The 7-day and $5,000 tests are conjunctive for the conference/training exception. |
| New Jersey | Withholding required from the first dollar of New Jersey-source wages. New Jersey applies a RETALIATORY convenience-of-the-employer rule (P.L.2023 c.125, enacted 7/21/2023, retroactive to 1/1/2023): it sources a nonresident's remote workdays to New Jersey only where the nonresident's HOME state imposes its own convenience rule -- currently Delaware, Nebraska and New York residents. It does NOT apply to Pennsylvania residents (reciprocity) or to Connecticut residents. |
| New York | Per TSB-M-12(5)I, an employer is not penalized for failing to withhold New York tax on a nonresident employee if: the employee's primary work location is outside New York, the employer reasonably expects the employee to work 14 days or fewer in New York during the calendar year, and the employee in fact works 14 days or fewer. ANY part of a day worked in New York counts as a full day (job-related training days do not count). The rule does NOT apply to traveling salespersons paid on volume, deferred compensation, or nonresident public speakers/athletes/entertainers. SEPARATELY, New York applies the strictest CONVENIENCE-OF-THE-EMPLOYER rule in the country: a nonresident's remote workdays are sourced to New York unless the employee works from a bona fide employer office outside New York (a demanding multi-factor test). |
| Pennsylvania | Withholding required from the first dollar of Pennsylvania-source compensation. Pennsylvania applies a LIMITED convenience-of-the-employer test: a nonresident who works remotely for a Pennsylvania employer is sourced to Pennsylvania where the remote work is for the employee's own convenience rather than the employer's necessity. Residents of reciprocal states (notably New Jersey) are exempt under the reciprocal agreement. |
Necessity versus convenience
The test turns on whether the remote arrangement serves the employer's needs or the employee's. Factors that have carried weight include: whether the role requires physical presence near clients or facilities outside the employer's state, whether the employer maintains a bona fide office at the remote location, whether the position was advertised as remote, and whether the employer reimburses the home workspace. Factors that have not carried weight include: the employer permitting remote work, the employee being more productive at home, and pandemic-era policy that has since lapsed.
New York's bona fide employer office test is the most demanding and the most litigated. It uses a primary factor (the home office is near specialised facilities that cannot be replicated at the employer's location) plus secondary and other factors that must be satisfied in combination. Meeting it is rare for ordinary knowledge work.
What to do about it
- Establish, in writing and at the time, why the role must be performed outside the employer's state. A contemporaneous memo is worth more than a reconstruction.
- Where the arrangement genuinely is employee preference, price the double taxation into the compensation conversation rather than discovering it at filing.
- Watch for reciprocal or retaliatory provisions. New Jersey's rule, for example, applies only to residents of states that themselves apply a convenience rule.