Why Business Travelers Remain a Hidden Tax Risk

The NASPP/Deloitte 2025 Equity Administration Survey shows that mobile employee compliance remains a priority for companies. However, business travelers continue to have the lowest compliance rates of any mobile employee group. Even so, the share of companies complying increased by 15% between the 2022 and 2025 surveys.

Why Payroll Tax Compliance for Business Travelers Is Critical

Compliance with the payroll tax requirements for business travelers is more imperative than ever for several reasons. State tax authorities are continuing their focus on remote worker taxation. Business travelers can easily be caught up in a remote worker payroll audit, as there are similarities between the two groups. In particular, remote workers who work temporarily in another state without establishing tax residency are generally taxed in the same way as business travelers. 

Companies should be particularly wary of their exposure in certain highly visible situations such as:

• An extensive project in a state where the company has no corporate presence.
• A large new establishment opening up, such as a flagship store or opening new corporate offices.
• An IPO. This is particularly the case for travelers to New York, e.g., when executives are meeting with investors or ringing the bell. New York state has a 14-day annual de minimis limit for employer withholding on income but no de minimis for multiyear income such as equity compensation.
• A new executive who does not immediately relocate to the headquarters state; the expectation is that someone in this situation will travel to headquarters for meetings.

California is known for comparing the named executives in SEC filings of California-based companies with personal tax returns received on the assumption that those executives would travel to headquarters for meetings. Like most states, California does not have a de minimis for a minimum number of days worked in the state. Individuals can be taxable even for one day of work in California, and their employers are required to apply California income reporting and tax withholding.

Some cities and localities, e.g., Kansas City, Missouri, also tax non-resident business travelers.

Global Business Travelers: How Tax Treaties Lower Compliance Risk

Ironically, even though the Equity Administration Survey found that there is higher compliance for global business travelers, the associated tax issues can be less significant for global travelers than for domestic ones. This is because of the extensive tax treaty network. For example, the United States has negotiated treaties with almost 70 countries. While not every treaty is the same, most exempt business travelers who meet the criteria of the relevant treaty.

Some countries, such as Canada and the United Kingdom, may require payroll withholding even for travelers who will probably be exempt from tax under a treaty, unless the company has applied in advance for an exemption from payroll withholding.

Tracking global business travelers has become relatively easy for tax authorities. Many countries, including Australia, European Union member states, and the U.K., have implemented information sharing between customs and immigration with the tax authorities.

US Domestic Travel: State Income Tax Rules for Business Travelers

Most US states, however, do not have interstate tax agreements similar to tax treaties. An employee who travels to another state for one day of work (including meetings or training) may be subject to tax in that other state on the income earned in that day. There are reciprocal agreements between some neighboring states, particularly in the Northeast, that allow residents of one state who work in another to pay tax only to their resident state. Typically, to benefit from such reciprocity agreements, employees should complete a form stating their non-residence in the work state.

To ease the administrative requirements on businesses and individuals, there have been legislative attempts in Congress to simplify the compliance requirements for domestic business travelers since 2009; these have been to no avail. In the current session, the Mobile Workforce State Income Tax Simplification Act of 2025 was introduced in April 2025 and is unlikely to be enacted prior to the midterm elections.

Companies are therefore left to comply with the varying non-resident taxation rules of each state.

How to Track Business Travelers for Mobility Tax Compliance

As business travelers do not change their home or office addresses in the HRIS system, they are the most difficult of all mobile employee categories to track. Companies use a variety of methods to track travelers, including

• Self-reporting
• Time sheet reporting
• Reports from the travel database / travel vendor
• Expense accounts
• Mobile phone or VPN tracking.

The NASPP/Deloitte survey confirmed that employee self-reporting continues to be the primary way companies collect information on employee mobility.

Note that with the proliferation of labor and privacy laws regarding employee tracking for remote work, legal advice should be sought before implementing any automated tracking system.

Furthermore, unlike other types of mobile employees, business travelers do not switch to a new payroll location. Therefore, the income allocation and associated payroll compliance apply to payroll (salary), equity compensation, other benefits, and long-term incentives. This makes business traveler compliance truly a team effort.

Those companies who have not yet started exploring business traveler compliance should begin by reviewing their executives’ travel as soon as possible.

For more information on state taxation of mobile employees, see the article “State Mobility Issues for Equity Compensation Professionals.”