States took a hands-off approach during the pandemic, but as remote work has persisted, each state is charting its own course — from explicit exclusions to Georgia's two-scenario test.
As of 2026, 52% of people working remote-capable jobs are hybrid, 26% are fully remote, and 22% are on-site (Gallup). While COVID started the increase of remote and hybrid jobs, data has proven that these arrangements persist in 2026 and show no sign of reversing. According to Tyler Heard writing in Smith+Howard, states took a hands-off approach during the pandemic when it came to determining nexus for hybrid employees. In many instances, states offered temporary exclusions for remote employees.
Since remote work has continued after the pandemic, many states are now in the process of determining the rules for remote employees creating income tax nexus. According to Heard, some states explicitly state that the presence of a remote worker is a specific exclusion from Public Law 86-272 protection. Others have no specific guidance and largely leave it up to employers to determine whether nexus exists. Many states fall somewhere in the middle of this spectrum.
Georgia has outlined specific criteria for hybrid and remote employees creating nexus. The article "Remote Work and Georgia Nexus: Are You Accidentally Creating a Taxable Presence?" explains the two scenarios that create a corporate income tax nexus in Georgia.
The first scenario is if "core business functions" are performed in Georgia — meaning that if a Georgia-based employee manages sales, client accounts, or administrative operations, their work ties the business to the state (McCandless). The second scenario is an employee having a home office based in Georgia. The home office can be considered a corporation's "place of business" even if a formal office is not maintained.
PL 86-272 may still protect the corporation if the Georgia employee's work is limited to solicitation and orders are accepted or shipped from outside Georgia, but even one employee with nexus will cause the corporation to comply with Georgia's corporate income tax laws. According to the Georgia Department of Revenue, even a single remote employee in Georgia can force a business to file and pay corporate income tax there. Businesses should conduct nexus reviews whenever they hire for this reason.