2024-01-26 08:00:00
Friday, January 26, 2024
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A new study looks at how states tax residents who work remotely — and Rhode Island ranks 44th.
The report was released this month by the National Taxpayers Union Foundationwhich says it “provides crucial, impactful research and analysis showing Americans how taxes, government spending, and regulations affect them.”
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“In a landscape reshaped by the rise of remote work, the Remote Obligations and Mobility (ROAM) Index has unveiled the best states for remote workers in terms of tax treatment,” states NTUF of its analysis. “This comprehensive index [is] designed to assess the tax-friendly environments for remote workers.”
According to NTUF, the ROAM Index “evaluates states based on various criteria, including state income tax rates, filing thresholds, reciprocity agreements and other factors influencing the financial well-being of remote workers. These top-ranked states not only offer enticing tax incentives but also provide a high quality of life and ample resources for remote professionals to thrive.”
RI — and U.S — in Focus
“Rhode Island is the 44th-best state by virtue of offering nothing meaningful in the way of filing or withholding thresholds or reciprocity agreements,” according to NTUF.
NTUF says that “ways for Rhode Island to improve” include:
* Pass filing and withholding thresholds of greater than 30 days
* Seek reciprocity agreements with:
* Massachusetts: 80.3 percent of incoming commuters
* Connecticut: 13.11 percent
“As remote work continues to redefine the modern workforce, it’s crucial to recognize the states that offer favorable tax treatment for remote workers,” said Andrew Wilford, NTUF’s Interstate Commerce Initiative Director and author of the ROAM Index. “Our aim with the index is to empower remote professionals by providing insights into states that not only support their work but also enable them to maximize their earnings and lifestyle choices.”
Remote work has experienced unprecedented growth, and with the flexibility it provides, individuals seek locations that not only accommodate their professional needs but also offer financial advantages. The ROAM Index aims to guide these decisions by shedding light on states that align with the best policy environment for remote workers.”
According to NTUF, the nine states without an individual income tax and the District of Columbia are set aside from the other 41 states in the ROAM Index.
NTUF writes:
“Those nine states with no individual income tax do not impose any income tax burdens on taxpayers working remotely in-state, for obvious reasons. Though there are differences between these states in terms of taxation of capital gains or dividend income, all nine states with no individual income tax are ranked in a tie for first place in the ROAM Index. With no state income tax obligations, remote workers don’t have to worry regarding being caught in a complex web of tax rules. These states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.”
And low-ranking states like Rhode Island, NTUF recommends the following:
The states that score low on the ROAM index should be following the lead of Indiana where, in 2023, elected officials passed new gold-standard rules for how to treat remote workers, including the implementation of 30-day filing and withholding threshholds. NTUF suggests the ideal policies that states can pass to join Indiana and other high-scoring states, and become attractive for remote workers in an economy where remote work figures to play a heavy role in the years to come.
Read their recommendations here
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