Tax Return Changes for Multi-State Remote Workers | HelloBooks Remote workers face the SALT cap, the overtime and tips deductions on the federal return, and state rules that vary. What to collect from them.
Remote workers file in more than one state more often than other employees. The federal changes are the same for everyone, but how they flow to each state return depends on that state.
Free Plan with invoices within 200 transactions, bills & quotes — no credit card.
SALT cap 2026
$40,400
Applies: Tax years 2025 and 2026From IRS.gov · checked October 10, 2026
Income taxes paid to several states all count toward the one federal SALT cap, which is $40,400 for 2026 and shrinks at higher incomes. Hourly remote workers can claim the overtime premium deduction on the federal return.
States decide for themselves whether to follow the new federal deductions, so a deduction on the 1040 may be added back on a state return. Check each state’s revenue department guidance before finishing state returns.
Ask remote workers to keep a simple work-location log through the year. Self-employed remote workers should also record income by client and state in their books, so each state’s share can be supported.
The plain-English summary for business owners
Schedule A · state and local taxes
Schedule 1-A · qualified overtime
By client type · high-income professionals
General information for tax professionals, not advice on a specific return. Figures are from IRS.gov on the date shown; check the current IRS instructions before filing.
Free Plan with full access to the AI accountant — no credit card, no time limit.