N.H. Announces It Will Sue Massachusetts Over Cross-Border Income Tax Collections - New Hampshire Public Radio

The lawsuit centers on a Massachusetts emergency provision that caps how much income out-of-state residents who work for Massachusetts-based companies can deduct on their income taxes while working remotely. .

“At a time when many New Hampshire residents are teleworking from home in order to keep their families and their communities safe, it is completely unfair for Massachusetts to levy an income tax on these workers,” said Pappas.

Massachusetts previously allowed out-of-state residents who worked for Massachusetts-based entities to deduct whatever portion of their income was derived while working from home.

In practice, this meant a worker who commuted four days a week but worked from home one day a week could reduce their taxable income by 20 percent. .

This spring, the state revised the policy to cap deductions at the proportion of time spent working remotely before the pandemic, meaning if an employee is now working from home five days a week instead of just a single day per week, they can still only deduct 20 percent of their income.   .

He was diligent about keeping track of the days he worked from home because Massachusetts allows commuters like him to deduct those days from their income tax obligations

The New Hampshire Attorney General is reviewing whether the Massachusetts Department of Revenue is violating either state or federal law as it seeks to collect income taxes from residents of other states during the pandemic