Telling your employer before you move is not a courtesy, it is the thing that protects you. A move can trigger a pay re-band, a change in which state withholds tax, new state registration obligations for the employer, and in a small number of states a rule that taxes you where the employer sits rather than where you work. Employers who discover it later have found a problem rather than been told about one.
Why telling them first matters
Because payroll has to be correct from the first day you are somewhere else. Withholding in the wrong state creates a filing mess for you and an exposure for the employer, and it is discovered at year end when it is expensive to unwind.
There is also a plain employment point. Working from a state your employer is not registered in can create obligations they have not met, and that is a far better conversation to have in advance than to be caught by.
What can change
Your band. Under a location model, moving somewhere cheaper can reduce pay. Ask whether adjustments are applied downward only or in both directions, because many are asymmetric.
Withholding. Generally the state where the work is performed, with reciprocity agreements between certain state pairs changing the answer.
The employer’s own obligations. Registration, unemployment insurance, workers’ compensation and sometimes state-specific leave entitlements.
The rule that catches remote workers out
A small number of states apply a convenience-of-the-employer test, New York the most prominently. Under it, days you work from home for an in-state employer can be taxed by that state anyway, unless the remote work is for the employer’s necessity rather than your convenience. It can produce tax in two states at once, and a credit does not always fully resolve it.
How to raise it
As a plan, with a date, before it happens. “I am planning to move to X in the spring — what does that do to my band and to payroll?” is a professional question. The same information arriving after the fact is a compliance incident with your name on it.
Common questions
Do I have to tell my employer I am moving?
Practically, yes. Payroll withholding, state registration and possibly your pay band all depend on where you actually work, and all are worse discovered late.
Can my pay be cut for moving somewhere cheaper?
Under a location-based model, yes. Ask whether adjustments run in both directions or downward only, because many are asymmetric.
Which state taxes my income?
Generally the state where the work is performed, with reciprocity agreements between certain state pairs changing it.
What is the convenience-of-the-employer rule?
A test used by a small number of states, New York most prominently, under which days worked from home for an in-state employer can still be taxed by that state.
When should I raise it?
Before the move, as a plan with a date. The same facts arriving afterwards become a compliance problem rather than a question.