Amtrak Act Tax Exemption: Who Qualifies, Withholding, and Filing

The Amtrak Act’s tax exemption limits state income tax on interstate transportation workers to a single state: the one where the employee lives. If you’re a rail, motor, or water carrier employee whose regularly assigned duties take you across state lines, no other state can tax the wages you earn doing that work, and your employer should be withholding state tax only for your home state. Air carrier employees are covered by a parallel rule with one key difference, explained below.

Who the Exemption Covers

The rules sit in different sections of federal law depending on the mode of transportation, but they share the same basic structure.

Rail Carrier Employees

Under 49 U.S.C. § 11502, pay from a rail carrier to an employee who performs regularly assigned duties on a railroad in more than one state is taxable only by the employee’s state of residence.¹ Coverage is broad. It reaches engineers and conductors, and it also reaches other railroad employees whose regular duties require recurring interstate work, not only those who ride the trains.²

Motor Carrier Employees

Under 49 U.S.C. § 14503, pay from a motor carrier or motor private carrier to an employee who performs regularly assigned duties in two or more states is subject to income tax only in the employee’s state of residence.³ This is the provision most over-the-road truck drivers rely on.⁴ It reaches beyond drivers to include mechanics and freight handlers whose work directly affects commercial motor vehicle safety and who work across state lines regularly.⁵ The employee must be subject to the jurisdiction of the U.S. Secretary of Transportation and must not be covered by the overtime requirements of the Fair Labor Standards Act. Purely supervisory, managerial, or consulting roles do not qualify, because those duties only indirectly affect vehicle safety.

Air Carrier Employees

Air carrier employees are covered by 49 U.S.C. § 40116(f), and the rule is different. An air carrier employee with regularly assigned duties on aircraft in at least two states owes income tax to the state of residence and to any state where the employee earns more than 50 percent of pay.⁶ The threshold is measured by comparing scheduled flight time in a given state to total scheduled flight time for the calendar year. If scheduled flight time in a non-residence state does not exceed 50 percent, that state cannot tax the income.⁷

Merchant Mariners

Under 46 U.S.C. § 11108, pay to a merchant mariner performing regularly assigned duties in more than one state is taxable only by the state of residence, on the same terms as rail and motor carrier workers.⁸

What “Regularly Assigned Duties” Means

The eligibility question turns almost entirely on this phrase. “Regular” means recurring at fixed or uniform intervals, whether daily, weekly, or monthly.² Sporadic, intermittent, or on-call trips across state lines do not satisfy the test.⁵

The share of interstate work does not have to be large. In one New York tax determination, out-of-state work amounted to roughly 10 percent of an employee’s working days, and the administrative law judge found that sufficient because those days were a recurring, essential part of the job.² What matters is whether the interstate work is scheduled and predictable, not whether it dominates the calendar.

For motor carrier employees, there is an added condition: the work must “directly affect” commercial motor vehicle safety. Oregon’s administrative code describes this as requiring hands-on physical interaction with the vehicle or its contents. A driver, a mechanic who services trucks, or a freight handler who loads cargo qualifies. A dispatcher, safety manager, or office clerk whose work touches safety only indirectly does not, even with the occasional trip to another state.⁵

Duties can shift mid-year. When they do, eligibility is measured separately for each period. Pay earned during a stretch of purely intrastate work is not exempt; pay earned during a qualifying interstate stretch may be.⁵

When the Exemption Does Not Apply

A non-residence state can still tax a covered transportation worker if that worker performs all regularly assigned duties within that single state. A nonresident truck driver whose routes stay inside one state is not exempt and remains subject to that state’s income tax.⁹ The federal preemption protects interstate work; it does not shelter intrastate work performed outside the home state.

How Withholding Should Work

Because the law operates by federal preemption, states have to comply. An employer covered by the statute withholds state income tax and files payroll tax returns only with the qualifying employee’s state of residence, not with each state the employee passes through.¹ A nonresident employee working in more than one state is fully exempt from income tax in each non-residence state.⁹

A common employer error is defaulting all withholding to the state where the company is headquartered. That mismatch can leave employees fighting refund claims at tax time and can affect access to state unemployment or disability benefits in the state where they actually live.³

States have built the federal rule into their own guidance. Colorado excludes qualifying rail, motor, and air carrier wages from its Part-Year Resident/Nonresident Tax Calculation Schedule.⁷ New York does not require employers to withhold New York income tax on nonresident motor carrier employees who work in New York and at least one other state.¹⁰ Massachusetts has confirmed that nonresident employees of interstate motor and rail carriers working in more than one state are exempt from Massachusetts income tax and withholding, and that nonresidents who were over-taxed may apply for an abatement.⁹

Documentation You Should Keep

The worker and the employer carry the burden of showing the exemption applies. If a state audits the claim and the records aren’t there, the exemption can be denied on that basis alone.⁵ Useful records include:

Department of Transportation logbooks showing routes driven across state lines.
A commercial driver’s license confirming qualification to operate commercial vehicles.
Bid shifts or work schedules from the employer showing regular interstate assignments.
Receipts and travel records verifying physical presence in more than one state.
A job description confirming hands-on safety-related duties, for motor carrier claims.

Filing the Return

If you’re covered, you file a resident state return reporting your full wages and, in most cases, no nonresident return in the states you passed through. If your employer withheld tax for a non-residence state anyway, you generally file a nonresident return in that state to recover it, and states that have published guidance on the Amtrak Act typically direct you to claim the exemption there. Keep the documentation above with your tax records; states that have addressed the exemption in writing expect to see it if they ask.

1
Office of the Law Revision Counsel. 49 U.S.C. § 11502
2
New York Division of Tax Appeals. Matter of the Petition of Francis J. and Joan McCann, DTA No. 816567
3
Office of the Law Revision Counsel. 49 U.S.C. § 14503
4
Alabama Department of Revenue. How Are OTR (Over the Road) Drivers Taxed?
5
Oregon Public Law. OAR 150-316-0173
6
Office of the Law Revision Counsel. 49 U.S.C. § 40116
7
Colorado Department of Revenue. Income Tax Topics: Part-Year Residents and Nonresidents
8
Illinois General Assembly. 86 Ill. Admin. Code § 100.2590
9
Massachusetts Department of Revenue. TIR 93-6: Employees of Interstate Motor and Rail Carriers
10
New York State Department of Taxation and Finance. Other Taxes on Carriers