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February 8, 2024

Gov. Lamont wants NY’s tax dollars from remote workers

HBJ Photo | Skyler Frazer Office of Policy and Management Secretary Jeffrey Beckham speaks during the opening day of the 2024 legislative session.
By Skyler Frazer

About 75,000 Connecticut residents work remotely for companies across the border in New York, and Gov. Ned Lamont wants them to pay taxes in the Nutmeg State rather than the Empire State.

Lamont is challenging those remote workers to take New York officials to court and fight against that state’s “Convenience of the Employer” rules, which require out-of-state employees to pay income taxes to New York rather than the state they live and work remotely in. Office of Policy and Management Secretary Jeffrey Beckham announced the proposal this week while going over Lamont’s budget recommendations for the current fiscal year.

“We think it’s an unconstitutional overreach by New York,” Beckham said.

Connecticut has more competitive income tax rates than New York, so Connecticut residents would see a savings on their tax payments. And the state would potentially generate up to $200 million in additional tax revenue if those remote workers paid taxes here. 

Lamont also wants to dangle an incentive for remote workers in Connecticut to challenge New York law. He’d like to offer a one-time 50% income tax credit to anyone who successfully challenges New York law. That carrot would need legislative approval.

The incentive program would cover the tax years from 2020 to 2023, Beckham said. He said the state got the idea from New Jersey, which recently implemented a similar program.

“If this is successful, it is not likely to generate revenue for the current biennium, but in the future, it could mean $200 million more in taxes to the state of Connecticut from those taxpayers,” Beckham said. “It's a benefit to the resident as well because our taxes are lower than New York so they have a lower tax liability.”

Lamont’s proposal could be a good way to incentivize remote workers to move to Connecticut, said Connecticut Business & Industry Association (CBIA) President and CEO Chris DiPentima.

“I think it's a big deal. We want more people living in the state obviously, like the governor said of having more taxpayers, not paying more taxes,” DiPentima said. “We're a state where a lot of people want to live with a great workforce, great quality of life, great education systems, rural mountains, oceans, and we got to lean into that, especially when you could really work anywhere and live anywhere nowadays. Having more people live in Connecticut and maybe working in this state is a great way to grow the economy.”

In a recent interview with the Hartford Business Journal, Department of Economic and Community Development acting Commissioner Daniel O’Keefe said the post-pandemic shift to remote work can be a significant economic driver for the state.

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