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NJ’s Version of ‘Convenience of the Employer’ Test Legislation Clears Budget Committee


Trenton – Legislation sponsored by Senator Joe Lagana that would create a “convenience of the employer” test for residents of states, such as New York, that impose a similar test, advanced out of the Senate Budget and Appropriations Committee. The bill would require New Jersey to adopt its own “convenience of the employer” rule, so it could tax employees of New Jersey companies choosing to work from home in other states.


“New York state’s ‘convenience of the employer’ rule unfairly impacts New Jersey residents and uses their tax dollars to help prop up New York’s operating budget. Our legislation seeks to even the playing field, while also establishing other means, such as tax credits for those who pay any income tax or wage tax imposed for the taxable year by another state, by which New Jersey workers might recoup some of their earned income,” said Senator Lagana (D-Bergen/Passaic).


Under the New York rule if an employee works from home for their convenience, rather than a requirement of the employer, those days are treated as days worked in their office. The New Jersey bill would take effect immediately; however, the convenience of the employer test would first apply to taxable years beginning on or after January 1, 2023.


The bill, S-3128, was released from the Senate Budget and Appropriations Committee by a vote of 12-0.