Best States to Hire Remote Employees, the States to Avoid, and Which State Law Applies

The easiest states to hire remote employees in are the ones with no state income tax and light employment rules: Florida, Texas, Tennessee, Nevada, South Dakota, Wyoming, Alaska and New Hampshire. There is no withholding account to run, no state return for the employee, and the labor code is comparatively thin. The states that cost you the most administratively are California, New York, Washington, Colorado, Illinois, Massachusetts and New Jersey, which combine income tax withholding with paid leave programs, pay transparency requirements and detailed wage and hour rules.

That said, "avoid" is the wrong instinct for most employers. None of these states is closed to you, and the overhead in a hard state is usually a few hundred dollars and a few hours of setup, not a barrier. The real question is whether one hire justifies opening a state, and that answer changes once you have two or three people there.

What actually makes a state easy or hard to hire in

The difficulty of a state has almost nothing to do with the people who live there and everything to do with the paperwork attached to employing one of them. Four things drive it.

Income tax withholding. If the state taxes wages, you register with its revenue department, withhold, remit on their schedule and file returns. Nine states skip this entirely.

Unemployment insurance. Every state requires its own unemployment account in the state where the employee works, with its own rate and wage base. This applies even in no-income-tax states, so "no income tax" never means "no registration at all."

Mandated leave and insurance programs. Paid sick leave, paid family and medical leave, and state disability insurance are the fastest-growing source of multi-state complexity. These come with their own payroll deductions, filings and job-protection rules.

Wage, hour and posting rules. Daily overtime, meal and rest break timing, final paycheck deadlines, expense reimbursement, and whether you must publish a salary range in the job posting.

The best states to hire remote employees

Ranked by administrative simplicity rather than talent quality, the nine states with no personal income tax in 2026 are the cleanest places to add a first employee. New Hampshire joined this group properly when it finished phasing out its interest and dividends tax on January 1, 2025, so it now taxes no form of personal income.

Washington is the interesting one. It has no wage income tax, which makes it look easy, but it runs one of the most demanding sets of employment programs in the country: paid family and medical leave, a long-term care payroll deduction, mandatory sick leave and one of the strictest pay transparency laws. Treat it as a high-overhead state that happens to have no income tax.

States to avoid hiring remote employees in, or at least to plan for

These states are not off limits. They simply carry the most setup and the most ongoing rules, so it is worth knowing what you are signing up for before the offer goes out rather than after.

There is a separate category worth flagging, and it catches employers by surprise because it is about where you are, not where the employee is. A handful of states apply a convenience of the employer rule, which can tax an employee on wages from an employer based in that state even when the employee never works there. If your company is headquartered in one of them, your remote hires can face a genuine double-tax exposure. We map which states apply it, and what it does to the employee, in our guide to working remotely from another state and where the taxes land.

Remote employees: which state law applies?

As a general rule, the employment law of the state where the employee physically works applies, not the state where your company is incorporated or where your headquarters sits. An employee working from Denver gets Colorado overtime rules, Colorado paid leave and Colorado final paycheck deadlines, even if every other person at your company is in Texas.

This surprises people because it runs opposite to the way commercial contracts work, where a governing law clause usually decides the question. Employment protections are generally not waivable by contract, so a clause selecting your home state's law will not override the employee's state on wage and hour, leave or termination rules. Where both states could apply, the practical answer is that the more protective standard usually governs.

The exception is the tax side, where the convenience rule described above can pull income back to the employer's state. Tax sourcing and employment law follow different logic, and it is entirely normal to owe tax to one state while following another state's labor code.

Which states require a salary range in the job posting?

This is the rule most likely to trip up a multi-state employer in 2026, because it applies at the point of posting, before you have hired anyone at all. Roughly 17 states plus the District of Columbia now have some form of pay transparency law on the books.

The distinction that matters is between states that require a good-faith pay range in the posting itself, and states that only require pay to be disclosed on request or before an offer.

Colorado, Illinois, New York and Washington go furthest, generally requiring a minimum and maximum, a description of benefits and other compensation, and internal notification of openings to existing employees. Verify the current text before you rely on any summary, including this one, because this area changes every legislative session.

The practical consequence for a remote listing is simple: if the role is open to any of these states, publish the range. A posting open to all fifty states is subject to the strictest rule among them, and building the range afterwards under pressure is how employers end up with numbers they cannot defend internally. Working out a defensible range you can publish before the role goes live is the cheaper order of operations. It also happens to improve applications: publishing pay is the single biggest lever on the quality of the people who apply.

How much does the state really change your cost?

Less than most people fear on the recurring side, more than they expect on setup. Registration itself is usually modest, often a few hundred dollars or less per state, plus the time to open revenue and unemployment accounts. Federal unemployment tax sits at 6 percent on the first $7,000 of each employee's wages, though employers who pay their state unemployment on time generally receive a credit that brings the effective federal rate to 0.6 percent. Missing a state registration can jeopardize that credit, which is one of the quieter costs of getting this wrong.

The ongoing differences show up in state-specific programs: disability and family leave contributions in California, New York, New Jersey and Washington, the long-term care deduction in Washington, and expense reimbursement in California and Illinois. Individually small, collectively the reason payroll providers charge per state. Our full breakdown of the employer side is in what it costs to hire a remote employee, and the registration sequence itself is in hiring remote employees in another state.

The practical way to choose

Do not build your hiring strategy around tax maps. The gap between the best and worst candidate for a role is worth far more than the few hundred dollars and few hours a state registration costs, and companies that restrict to five easy states routinely lose the person they wanted.

What works in practice is a tiered approach. Open the no-income-tax states by default, since the setup is trivial. Keep a second tier of high-overhead states you will open for a strong candidate, and price the setup into the requisition so nobody has to relitigate it mid-process. Use an employer of record for one-off hires in states you do not expect to return to, since paying a per-employee fee beats maintaining a registration for a single person. And revisit the list annually, because the moment you have two or three people in a state, the overhead per employee stops mattering.

If you are hiring an assistant, a bookkeeper or a support person as your first out-of-state employee, which is the most common pattern, the state question is usually simpler than it looks: those roles are asynchronous, rarely licensed, and open in all fifty states more often than engineering roles are. You can see what that looks like in practice on our board, or start with hiring a virtual assistant and hiring a remote bookkeeper. When you are ready to post, remote job posting pricing covers the plans.