Connecticut House Republicans say a little-known tax policy is quietly sending hundreds of millions of dollars out of Connecticut each year, and it is increasingly drawing attention from lawmakers on both sides of the issue.\u00a0<\/p>\n
At a March 30 press conference, House Minority Leader Vincent Candelora highlighted what\u2019s known as the \u201cconvenience of the employer\u201d rule, which allows New York to tax Connecticut residents who work remotely for New York-based companies.\u00a0<\/p>\n
In practice, that means some Connecticut residents are living and working in-state \u2014 but paying income taxes to New York.\u00a0<\/p>\n
\u201cThere are roughly 80,000 people working in Connecticut not paying taxes here, but rather paying them to New York,\u201d\u00a0he said, estimating the impact at more than $340 million annually.\u00a0<\/p>\n
A Policy with Real Consequences<\/p>\n
The issue is straightforward in concept, but complex in practice.\u00a0<\/p>\n
\u201cIf you\u2019re working in Connecticut, you should be paying taxes in Connecticut,\u201d Candelora said. \u201cTo think that you have individuals that are here, living in the state, working in the state, and not having to pay our income taxes\u2026 makes no sense whatsoever,\u201d he added.\u00a0<\/p>\n
Under New York\u2019s policy, income can still be taxed by New York even if the work is performed entirely outside the state, unless the employer requires the employee to be physically located elsewhere. Because Connecticut provides a credit for taxes paid to other states, the result is a loss of revenue that would otherwise stay here.\u00a0<\/p>\n
For Connecticut, that means fewer resources to support state and local priorities, even as residents continue to live, work, and spend within the state.\u00a0<\/p>\n
What the State\u2019s Own Analysis Says<\/p>\n
This is not a new issue.\u00a0In 2025, Gov. Ned Lamont signed legislation directing the Office of the Attorney General to study \u201cspecific steps\u201d Connecticut\u00a0could take to address the problem.\u00a0<\/p>\n
The\u00a0resulting\u00a0report, submitted in December 2025,\u00a0confirmed the core challenge: Connecticut likely cannot bring a direct legal challenge against New York.\u00a0<\/p>\n
\u201cThe U.S. Supreme Court has held that a state lacks standing to sue on its own behalf in situations such as this,\u201d the report noted.\u00a0<\/p>\n
Instead, the report pointed to individual taxpayers as the\u00a0most viable path forward. One such case is currently underway, brought by Connecticut resident Edward Zelinsky, who is challenging New York\u2019s policy in state court.\u00a0<\/p>\n
For now,\u00a0Connecticut has taken a measured approach, monitoring that litigation to assess next steps.\u00a0<\/p>\n
Lessons from Past Efforts<\/p>\n
Connecticut has not always taken a passive role.\u00a0<\/p>\n
In 2021, when New Hampshire sued Massachusetts over a\u00a0similar pandemic-era tax policy, Connecticut \u2014 along with New Jersey, Hawaii, and Iowa \u2014 filed an amicus brief supporting the case.\u00a0The filing argued that taxing remote work performed out of state raised constitutional concerns and could result in\u00a0between $339 million and $444 million in tax credits depending on remote work rates.\u00a0<\/p>\n
While the Supreme Court\u00a0ultimately declined to hear the case,\u00a0it demonstrated that states can play a role in shaping the broader legal conversation.\u00a0<\/p>\n
Different Approaches Across States<\/p>\n
Connecticut has taken steps to support individual taxpayers.\u00a0PA 25-172\u00a0allows residents who successfully challenge out-of-state taxation to claim a partial credit against their Connecticut tax liability. \u00a0<\/p>\n
Other states have taken additional approaches. New Jersey, for example,\u00a0has an equivalent credit, which sits at 50%. But New Jersey didn\u2019t stop there. In July 2023, Gov. Phil Murphy signed legislation that went beyond rewarding individuals who fight and win. \u00a0<\/p>\n
New Jersey created a $10 million grant pilot program to incentivize businesses to physically reassign New Jersey resident employees from out-of-state locations back to New Jersey, cutting New York off at the source before a single lawsuit needs to be filed. It also created a $2,000 tax credit for individual employees who get permanently reassigned to a New Jersey location.\u00a0<\/p>\n
These differing strategies reflect the broader challenge: while the legal framework limits direct action, there are still policy tools available to mitigate the impact.\u00a0<\/p>\n
A Broader Affordability Question<\/p>\n
The issue also intersects with Connecticut\u2019s broader affordability challenges.\u00a0When income earned in Connecticut is taxed elsewhere, it affects the state\u2019s ability to manage its fiscal structure and maintain competitive tax policies. It also raises questions about how Connecticut positions itself in an economy where remote work is increasingly common.\u00a0<\/p>\n
Rep. Joe Polletta pointed to rising local tax burdens, especially property taxes.\u00a0<\/p>\n
\u201cProperty taxes are the most regressive tax that Connecticut residents pay,\u201d Polletta said.\u00a0<\/p>\n
To address that, Republicans are proposing to expand the state\u2019s property tax credit.\u00a0<\/p>\n
\u201cWhat we want to do is double the state property tax credit from 300 to $650\u2026 so that\u2019s right away savings,\u201d he said.\u00a0<\/p>\n
Unlike one-time rebate proposals, Polletta said the goal is ongoing relief.\u00a0<\/p>\n
\u201cRepublicans are looking for something that is more consistent, that is long term, that is residual, that will have an impact for years to come,\u201d he said.\u00a0<\/p>\n
Candelora argued that capturing revenue currently going to New York could help fund that kind of relief.\u00a0<\/p>\n
\u201cWe\u2019re just pointing out an observation that there\u2019s $340 million being given over to New York that we could actually bring to Connecticut and incorporate tax relief,\u201d he said.\u00a0<\/p>\n
Stop Watching. Start Fighting.<\/p>\n
At some point, monitoring becomes a strategy for doing nothing.\u00a0<\/p>\n
Connecticut could file an amicus brief in the Zelinsky case tomorrow \u2014 it has done exactly that before in a nearly identical dispute. It could coordinate with New Jersey, which is still in this fight. It could actively promote the challenge credit it already passed so that more residents actually know it exists. And it could pursue employer-side incentives that don\u2019t require individual residents to spend years in court to benefit.\u00a0<\/p>\n
The legal and policy constraints surrounding the issue are real. Connecticut cannot simply rewrite another state\u2019s tax rules, and any resolution will likely involve ongoing litigation or broader federal guidance.\u00a0<\/p>\n
But the scale of the issue, both in terms of affected taxpayers and lost revenue, suggests it will remain part of Connecticut\u2019s policy conversation.\u00a0<\/p>\n
With remote work now a permanent feature of the modern economy, the question is not whether the issue will persist, but how states choose to respond.\u00a0<\/p>\n
For Connecticut, that response may ultimately determine whether more of its residents\u2019 income stays within the state, or continues to flow elsewhere.\u00a0<\/p>\n
\u2014
\u00a0Meghan Portfolio is Manager of Research and Analysis at Yankee Institute<\/p>\n","protected":false},"excerpt":{"rendered":"Connecticut House Republicans say a little-known tax policy is quietly sending hundreds of millions of dollars out of…\n","protected":false},"author":2,"featured_media":181419,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[38],"tags":[128,11301,9,24,63,5288,129,131,130],"class_list":{"0":"post-181418","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-the-bronx","8":"tag-bronx","9":"tag-free","10":"tag-new-york","11":"tag-new-york-city","12":"tag-nyc","13":"tag-taxation","14":"tag-the-bronx","15":"tag-the-bronx-headlines","16":"tag-the-bronx-news"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/181418","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=181418"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/181418\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/181419"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=181418"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=181418"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=181418"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}