Massachusetts trying to tax New Hampshire residents working from home

Massachusetts trying to tax New Hampshire residents working from home

With many people still working from home, Massachusetts is trying to find a way to keep income tax streams flowing from out-of-state workers.

New Hampshire workers don’t send a cut of every paycheck to their state government.

That’s because they choose to live in a state with no income tax.

But if Massachusetts government gets its way, Granite Staters working from home could find their earnings flowing across state lines.

When COVID-19 gripped New England, many employees began working from home, including New Hampshire workers who commuted to Massachusetts for work each day. In response, Massachusetts Gov. Charlie Baker filed an emergency rule allowing the state to collect income taxes from New Hampshire workers who normally pay income taxes in Massachusetts because their office is in the Bay State – even though these employees were no longer coming to Massachusetts for work.

In July, the Massachusetts Department of Revenue extended the emergency order through the end of 2020 or the end of Baker’s state of emergency should it come first. New Hampshire Gov. Chris Sununu and New Hampshire Democrats have expressed strong opposition to the rule.

Sununu told CNBC that Massachusetts is trying to “pick the pockets of the people of New Hampshire.”

“They’re coming after our citizens,” Sununu said of the 97,000 Granite State residents who normally travel south for work each day. “And we’re going to put up a fight for it.”

“You don’t start creating new rules and new gimmicks because you haven’t created a successful model like New Hampshire has, right? So of course we’re going to defend our citizens and defend our businesses, and that’s why they’re flooding over here.”

With working from home becoming a more permanent option for many employers as the pandemic drags on, Baker’s orders create a precedent that allows other states to dig into the wallets of people who spend little to no time in a state they’re paying taxes toward.

Sununu pledged to have the New Hampshire Department of Justice investigate “whether any state” is improperly taxing New Hampshire residents.

By commuting to Massachusetts, New Hampshire workers sacrifice their income-tax free earnings. But as long as they’re working in their home state, that burden should remain on the other side of the border.

 

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