U.S. States with Income Tax Reciprocity Agreements

1. General Concept of Reciprocity

• If two states have a reciprocity agreement, a resident only pays income tax in their home state, even if they work in the neighboring state.
  
  

• Workers must file a form with their employer to have state withholding taxes applied to their home state instead of the work state.

2. States with Reciprocity Agreements

3. Important Notes

1. Reciprocity generally applies only to wages and salaries. Other types of income (self-employment, rental, business) are taxed by the state where earned.
   
   

2. Form filing is required. Employees must notify their employers using state-specific forms to have withholding applied correctly.
   
   

3. Non-residents without reciprocity must pay income tax to the state where the work is performed.
   
   

4. Summary

• There are 12 U.S. jurisdictions with reciprocity agreements: DC, IL, IN, IA, KY, MD, MI, MN, NJ, OH, PA, VA, WV
  
  

• Reciprocity agreements simplify taxation for cross-border workers and prevent double taxation of earned wages.
  
  

• Home-state income tax is still owed even if working in a reciprocal state.

Contact us today at (214) 699-4790 to discuss your tax situation and we can help apply for tax credits if the reciprocity agreement applies to your tax situation.