PaycheckByState

State Tax Reciprocity Agreements (2026): Living in One State, Working in Another

Which states have income tax reciprocity in 2026, how to claim an exemption from work-state withholding, and what to do if you live and work in different states.

Updated September 29, 20262026 tax year

By , Registered Investment Adviser (South Carolina) ยท Updated September 29, 2026

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Tax reciprocity โ€” 2026 guide from PaycheckByState

What tax reciprocity means

If you live in one state and work in another, both could claim income tax on your wages. Reciprocity agreements let residents of certain state pairs pay tax only to their home state. Sixteen jurisdictions have them in 2026.

Reciprocity agreements by state

Work stateResidents of these states are exempt from its wage tax
District of ColumbiaMaryland, Virginia
IllinoisIowa, Indiana, Kentucky, Michigan, Wisconsin
IndianaIllinois, Kentucky, Michigan, Ohio, Pennsylvania, Wisconsin
IowaIllinois
KentuckyIllinois, Indiana, Michigan, Ohio, Virginia, West Virginia, Wisconsin
MarylandDistrict of Columbia, Pennsylvania, Virginia, West Virginia
MichiganIllinois, Indiana, Kentucky, Minnesota, Ohio, Wisconsin
MinnesotaMichigan, North Dakota
MontanaNorth Dakota
New JerseyPennsylvania
North DakotaMinnesota, Montana
OhioIndiana, Kentucky, Michigan, Pennsylvania, West Virginia
PennsylvaniaIndiana, Maryland, New Jersey, Ohio, Virginia, West Virginia
VirginiaDistrict of Columbia, Kentucky, Maryland, Pennsylvania, West Virginia
West VirginiaKentucky, Maryland, Ohio, Pennsylvania, Virginia
WisconsinIllinois, Indiana, Kentucky, Michigan

Agreements are bilateral, so this table is symmetrical for most pairs. Some (like the District of Columbia's) work one-way through general exemptions for nonresident wages.

How to claim reciprocity

  1. Confirm your state of residence and your work state have an agreement.
  2. Ask your employer for the work state's nonresident exemption certificate (many states publish it on their revenue site).
  3. Complete and return it. Renew it if the state requires annual updates.
  4. Make sure your employer withholds your home state's tax instead.

If tax was withheld by mistake, file a nonresident return in the work state to request a refund.

When there is no agreement

You generally owe income tax to the state where you physically work. Your home state usually gives a credit for tax paid to the other state so income is not taxed twice, but the credit may not cover the entire difference. Living in a no-income-tax state does not exempt you from the work state's tax.

Remote work and the "convenience of the employer" rule

A few states, including New York, tax nonresidents who work remotely for an in-state employer for their own convenience. These rules can override reciprocity in practice, so confirm the treatment of remote days with the state's tax agency or a tax professional.

Frequently asked questions

What is a tax reciprocity agreement?

An arrangement between two states under which residents of one who work in the other pay income tax only to their home state.

Is reciprocity automatic?

No. You usually must file an exemption certificate with your employer so the work state does not withhold.

Which state has the most reciprocity agreements?

Pennsylvania, Kentucky, Michigan and Indiana are among the states with the most agreements โ€” each has agreements with five to seven other jurisdictions.

What if my states have no agreement?

You generally file a nonresident return in the work state and claim a credit for that tax on your home-state return.

Try it with your numbers

Sources

Estimates for information only, not tax advice. See our disclaimer and editorial policy.

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On this page (8 sections)
  1. What reciprocity means
  2. Reciprocity agreements by state
  3. How to claim it
  4. When there is no agreement
  5. Remote work and the convenience rule
  6. FAQ
  7. Try it with your numbers
  8. More guides