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Get your taxes done using TurboTax
Employees who work remotely will generally pay taxes to the state in which the work is performed (the "physical presence" rule). If all of your work will be performed from your new home in Texas, you will fall under Texas rules and not be subject to any state income tax.
If you employer switches your role to that of a freelancer, you will be considered self-employed by the IRS. You will file a Schedule C along with your tax return, and be subject to self-employment taxes. As an employee, you have been paying 7.65% of your pay for social security and medicare taxes, and your employer is matching that amount. When you are self-employed, you are both the employee and the employer, and will pay both parts of that tax. Keep this in mind when negotiating your salary as a freelancer.
The IRS has distinct rules for classifying someone as a freelancer versus an employee, an employer cannot simply reclassify unless the employee's job description and role changes. More information can be found here: Employee or Contractor?
A remote or work-from-home employee will not need a business license, but you should check with the city to see if they require licensing for freelancers. It usually depends upon your occupation, as well as local ordinances.
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