Louisiana Establishes Threshold for Nonresident Income Tax Withholding

With the age of remote work gaining popularity, some states are beginning to propose legislation to ensure that all employees' taxes are withheld correctly, based on work and home locations. Starting January 1st, 2022, employers in the state of Louisiana are not required to withhold Louisiana state income tax from the wages of nonresident employees unless the employee's time performing employment duties within the state exceeds 25 days. This means is that if an employee exceeds the 25-day minimum completing employment duties within Louisiana state lines, their employer is required to withhold and remit taxes for each day in the calendar year spent working, which includes the initial 25 days.

However, it should be noted that this threshold won't be applied to certain persons who operate in Louisiana, such as professional athletes and athletic team staff members, entertainers, public figures, and qualified production members (involving the motion picture industry). This threshold primarily applies to nonresident workers who work for an employer stationed in Louisiana while living out of the state. As it stands now, employers in Louisiana must withhold tax for all nonresidents, regardless of the number of days worked in Louisiana. Louisiana also does not have reciprocal withholding agreements with any states, meaning that employees are not exempt from the state and local taxes in their state of employment.

As more and more people find remote work beneficial to their lifestyle and work remotely across state lines, more states could see similar legislation come into the light as tax regulations adapt to fit the new norm of working. To learn more about Louisiana remote worker exemptions visit the Louisiana State Legislature website!