Reciprocal State Tax Agreements and Your Pay
One form decides whether your paycheck is withheld for your home state or the state you work in. Here's the sourced 2026 table and what it changes.
This article is general information, not tax or financial advice. Tax rules change, individual situations vary, and every figure here is an estimate. Confirm specifics with a qualified tax professional before making money decisions.
What reciprocity actually does to your paycheck
Pull up your last pay stub and look at the state lines. If the state named there is not the state you live in, or if there are two state lines instead of one, you are looking at the exact problem this article fixes.
A reciprocal tax agreement is a deal between two states. The work state agrees not to tax the wages of the other state’s residents, so payroll withholds for your home state only. One state line on the stub instead of two, and no nonresident return next April.
None of it happens automatically, which is where people get caught. Withholding defaults to where you physically perform the work. The agreement exists, but you have to claim it by handing a certificate to your employer, and until you do, the default is wrong for you.
What reciprocity covers, and what it does not
Reciprocity applies to wages and salary. That is the whole scope. Pennsylvania’s own guidance puts it in one line: these agreements “apply to employee compensation only.”
Self-employment or contractor income, rental income, investment income, anything that is not employee compensation: none of it qualifies. City and municipal income tax sits outside the deal too, and so does state unemployment insurance. Michigan states its own limits the same way, noting that reciprocal agreements do not apply to independent contractors, local taxes, or income other than compensation.
Federal income tax, Social Security and Medicare are untouched. Nothing on the federal side of your stub changes at all, in either direction. Reciprocity is a fight between two state revenue departments, and you are the person standing in the middle with a certificate.
About 30 of these agreements exist, among 15 states plus the District of Columbia, according to the Tax Foundation’s count as of January 1, 2025. Twenty-six income-tax states have none at all.
Which states have agreements in 2026
This table is organized by work state, because that is the state agreeing not to tax you and the state whose form you file. Find the state where you physically work, then check whether your home state is in the second column.
| Work state | Residents who qualify | Exemption certificate | Refile every year? | Source |
|---|---|---|---|---|
| Arizona (see note) | California, Indiana, Oregon, Virginia | Form WEC, Employee Withholding Exemption Certificate | Yes, a new form at the start of each calendar year | azdor.gov |
| District of Columbia (see note) | All nonresidents, no state list | Form D-4A, Certificate of Nonresidence in the District of Columbia | Not stated | otr.cfo.dc.gov |
| Illinois | Iowa, Kentucky, Michigan, Wisconsin | Form IL-W-5-NR, Employee’s Statement of Nonresidence in Illinois | No, but 10-day notice if residence changes | tax.illinois.gov |
| Indiana | Kentucky, Michigan, Ohio, Pennsylvania, Wisconsin | Form WH-47, Certificate of Residence | No, but report a change of legal residence | in.gov |
| Iowa | Illinois only | Form 44-016, Employee’s Statement of Nonresidence in Iowa | No, 10-day notice on change of residence | revenue.iowa.gov |
| Kentucky | Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, Wisconsin | Form 42A809, Certificate of Nonresidence | No, event-driven on change of residence | revenue.ky.gov |
| Maryland | DC, Virginia, West Virginia (line 4); Pennsylvania (line 5) | Form MW507, Employee’s Maryland Withholding Exemption Certificate | Advisory, not mandatory | marylandcomptroller.gov |
| Michigan | Illinois, Indiana, Kentucky, Minnesota, Ohio, Wisconsin | No state form exists. The employer uses its own form or a signed letter | Not specified | michigan.gov |
| Minnesota | Michigan and North Dakota only | Form MWR, Reciprocity Exemption/Affidavit of Residency | Yes, due February 28 each year | revenue.state.mn.us |
| Montana | North Dakota | Form MW-4, Montana Employee’s Withholding and Exemption Certificate | Yes, renewed before the start of the next year | revenue.mt.gov |
| New Jersey | Pennsylvania | Form NJ-165, Employee’s Certificate of Nonresidence in New Jersey | Not stated, 10-day notice if you leave PA | nj.gov |
| North Dakota | Minnesota, Montana | Form NDW-R, Reciprocity Exemption from Withholding | Yes, new form each year, due February 28 | tax.nd.gov |
| Ohio | Indiana, Kentucky, Michigan, Pennsylvania, West Virginia | Form IT 4, Employee’s Withholding Exemption Certificate | No, update when prior information becomes incorrect | tax.ohio.gov |
| Pennsylvania | Indiana, Maryland, New Jersey, Ohio, Virginia, West Virginia | Form REV-419 EX, Employee’s Nonwithholding Application Certificate | No, explicit carve-out for reciprocal-state residents | pa.gov |
| Virginia | DC, Kentucky, Maryland, Pennsylvania, West Virginia | Form VA-4, line 3 | Yes, for each calendar year you claim exemption | tax.virginia.gov |
| West Virginia | Kentucky, Maryland, Ohio, Pennsylvania, Virginia | Form WV/IT-104NR, West Virginia Certificate of Nonresidence | Not stated, 10-day notice on change | tax.wv.gov |
| Wisconsin | Illinois, Indiana, Kentucky, Michigan only | Form W-220, Nonresident Employee’s Withholding Reciprocity Declaration | No, stays in effect while reciprocity applies | revenue.wi.gov |
Every row above links to the issuing state’s own page or PDF. That matters more than it sounds, because the widely copied versions of this table have gone stale in specific, checkable ways.
Four things the roundups still get wrong
Minnesota and Wisconsin no longer have an agreement. It ended January 1, 2010, and the Wisconsin Department of Revenue says so flatly. Minnesota’s own page lists Michigan and North Dakota, full stop. Any table still pairing Minnesota with Wisconsin is more than fifteen years out of date. (Michigan and Minnesota are paired, effective 1984. Those are different bilateral deals, so do not correct one into the other.)
Ohio retired Form IT 4NR. Ohio’s own 2026 withholding guidelines put it plainly: the current IT 4, revised 12/2020, “is a combined document that replaces” the old IT 4, the IT 4NR, and the two military forms. Nearly every competing table still names IT 4NR.
Michigan has no reciprocity form at all. Revenue Administrative Bulletin 2017-13 says it directly: “Michigan does not furnish non-residency certificates. An employer may develop a form on its own or obtain the required information from the nonresident employee by way of a letter.” If a list tells you to file MI-W4 for reciprocity, it is wrong. MI-W4 is the ordinary Michigan withholding certificate.
Iowa’s form is 44-016, the Employee’s Statement of Nonresidence in Iowa. It is not the IA W-4, which is a different form entirely.
Why the state count is 15, 16 or 17 depending on who you ask
Two entries in the table above are structurally different from the rest, and that is the whole source of the confusion.
Arizona is not a bilateral agreement. Form WEC exempts residents of California, Indiana, Oregon and Virginia from Arizona withholding, but the exemption is conditioned on the employee being entitled to a reverse credit on an Arizona Form 140NR. Arizona is explicit that you may still owe a return: even though your wages are exempt from Arizona withholding, you may still have to file an Arizona income tax return. Note also that Virginia’s own reciprocity list does not include Arizona. The exemption runs one way.
The District of Columbia is unilateral by statute. The Home Rule Act, D.C. Code section 1-206.02(a)(5), bars the District from imposing any tax on the personal income of a nonresident. DC has no partners because it needs none: every nonresident is exempt, and the instrument is Form D-4A. (The DC withholding forms page currently carries a note that the D-4A is under review, and the most recent posted revision is from 2016.)
Leave Arizona’s one-way exemption out of the count, as the Tax Foundation does, and you get 15 states plus DC. Treat Arizona and DC as ordinary partners instead and you get the 16 or 17 you see on payroll-vendor blogs.
The form that actually stops the wrong withholding
Three mechanics matter here, and every one of them surprises somebody.
You give the form to your employer, not to a state. The certificate is a payroll document. Nobody mails it to a revenue department. It sits in your employee file, and it tells payroll which state’s withholding tables to run. Hand it to HR or payroll, then confirm it was actually entered in the system.
It is prospective only. Filing the certificate in June does not undo January through May. It stops future work-state withholding, and that is all. Money already taken by the wrong state comes back only as a refund on a nonresident return the following spring.
Some states want a fresh one every year. Minnesota’s Form MWR is the strictest example: due by February 28 annually, or within 30 days of starting work or changing residence, and a new one each year to stay exempt. North Dakota, Montana, Arizona and Virginia also run on annual renewal. Pennsylvania is the notable exception, stating that reciprocal-state residents do not need to refile unless their state of residence changes.
How to tell it worked
Check your next stub. The state line should name your home state, and the work state should be gone.
At year end, the W-2 is the confirmation. Minnesota describes the correct result plainly: Box 15 shows the employee’s state of residence, Box 16 shows the wages, and Box 17 shows zero. If Box 17 has a number in it for a state you do not live in, the certificate never took effect.
If payroll drags its feet, the practical move is to ask which specific document they need, since a few states (Michigan most obviously) leave the format to the employer. And if you moved mid-year, expect a split: work-state withholding for the months before the certificate, home-state withholding after, and two returns to sort it out.
What your check looks like with and without the certificate
Take the highest-volume pair in the country: you live in New Jersey and work in Pennsylvania. Pennsylvania’s personal income tax is a flat 3.07 percent, and employer withholding uses the same rate.
Scenario A, certificate on file. You give your Pennsylvania employer Form REV-419 EX, the Employee’s Nonwithholding Application Certificate. (A Pennsylvania resident working in New Jersey files the mirror-image form, NJ-165.) Pennsylvania withholds nothing. Your stub shows one state line, New Jersey, and you file one resident return.
Scenario B, no certificate. Pennsylvania withholds 3.07 percent of your wages all year. On a $60,000 salary that is $1,842. On $100,000 it is $3,070. Not one dollar of it was ever owed, because the agreement means Pennsylvania has no claim on your wages. You get it back by filing a Pennsylvania nonresident return, roughly a year after the first dollar left your check.
Scenario C, the worst one. Payroll withholds Pennsylvania at 3.07 percent and your employer or a second job also withholds New Jersey. Two state lines, two bites, and your take-home is short by the full Pennsylvania amount every single payday until somebody fixes it.
In the reciprocity case this is a cash-flow problem, not a tax problem. You do get the money back. You just financed another state’s treasury for up to sixteen months, interest free, in increments small enough that you might not notice on a single stub. That $3,070 on a $100,000 salary is about $118 out of every biweekly check.
That is also the number that answers “is this form worth chasing down on Monday?” It usually is.
When reciprocity does not save you
This is where most articles stop and where the real money is.
Convenience-of-the-employer rules
Some states tax a nonresident’s remote work days as if they happened in the office, unless the employee works remotely out of the employer’s necessity rather than their own convenience. The Tax Foundation counts eight states with such rules: Alabama, Connecticut, Delaware, Nebraska, New Jersey, New York, Oregon and Pennsylvania. Five are full rules and three apply only in limited situations.
New York is the flagship. Its guidance for nonresidents states that telecommuting days count as New York days “unless your employer has established a bona fide employer office at your telecommuting location,” and that test is hard to meet.
Where a reciprocity agreement exists, it takes precedence. New Jersey says so outright about its own rule: “This legislation does not apply to Pennsylvania residents who work in New Jersey, since there is a Reciprocal Agreement in place with that state.” The logic is clean. If the work state agreed not to tax your wages at all, there is no income left for a convenience rule to source.
Pennsylvania has both a convenience test (61 Pa. Code section 109.8) and six reciprocity partners. So a telecommuter living in Indiana, Maryland, New Jersey, Ohio, Virginia or West Virginia is shielded from Pennsylvania regardless of convenience. A telecommuter living in New York, Delaware or Connecticut is exposed.
The states with no agreements at all
New York, Connecticut, California and Massachusetts have no reciprocity agreements. That is the most common wrong assumption among people searching this topic, and it burns New York and New Jersey commuters hardest, because New York has a convenience rule and no reciprocity, so nothing shields you from it.
The evidence here is negative rather than quoted: no revenue department publishes a sentence saying “we have no agreements.” New York’s employer withholding page requires withholding for all nonresidents paid for in-state services with no reciprocity exception, and points to a nonrefundable resident credit as the remedy. Connecticut’s current employer tax guide, IP 2026(1), does not contain the word “reciprocity” anywhere in it. California and Massachusetts rest on the Tax Foundation’s list of participating states, which excludes both. One distinction is worth keeping straight. California does not exempt nonresidents from California withholding, even though Arizona does let a California resident claim exemption from Arizona withholding on Form WEC.
Local and city income tax
Reciprocity stops at the state line, and city taxes are below it.
New Jersey states the rule in current guidance: “The New Jersey/Pennsylvania Reciprocal Agreement does not apply to the income or wage tax imposed and collected by the City of Philadelphia or any other municipality in Pennsylvania.” So a New Jersey resident with a Philadelphia job is exempt from Pennsylvania state tax and still pays the Philadelphia wage tax.
The same pattern shows up everywhere:
- Indiana, Information Bulletin #33: “Indiana reciprocity agreements do not cover withholding requirements concerning Indiana Local Income Taxes.” Residents of reciprocal states pay local income tax exactly like everyone else.
- Maryland builds it into the form. A Pennsylvania resident claiming exemption on MW507 line 5 is still liable for withholding at the rate for the Maryland county where they work, unless line 6 or line 7 applies.
- Pennsylvania’s Act 32 local earned income tax follows the worksite. State guidance notes that an out-of-state resident employee still owes the work-location nonresident EIT rate and the Local Services Tax.
- Philadelphia runs its own convenience test, independent of Pennsylvania state law, and says it is not a party to any reciprocal tax agreement with any other municipality.
- Ohio’s municipal withholding statute, ORC section 718.011, sources tax to where services are performed and contains no reciprocity exemption. Reciprocity lives in a different chapter of the code, the one governing state tax.
Unemployment insurance follows the work state
Your SUI wages get reported to exactly one state, chosen by the US Department of Labor’s four-factor localization-of-work test: localization of service, then base of operations, then direction and control, then residence. Reciprocity has no bearing on it.
In practice that means your income tax can follow your home state while your unemployment coverage follows the work state. That is not an error on anyone’s part, just two different rulebooks running side by side.
Hybrid schedules were never in the design
These agreements were written for people who cross a state line five mornings a week. Two-days-in-office arrangements do not fit the model cleanly, and several agreements carry conditions that assume a daily commute. Kentucky’s agreement with Virginia covers “Virginia residents commuting daily to work in Kentucky.” Virginia requires DC and Kentucky residents to commute daily, and caps Maryland, Pennsylvania and West Virginia residents at 183 days of presence with wage income only. Kentucky overrides reciprocity entirely if you keep a place to live there and spend more than 183 days in the state.
Two more partner-specific limits worth knowing: the Kentucky and Ohio agreement excludes S-corporation shareholder-employees holding a 20 percent or greater stake, and Maryland’s Pennsylvania arrangement is a state-level exemption only, as covered above.
The mismatch keeps getting more common, because 75 percent of employed adults whose jobs can be done from home now work remotely at least some of the time. If your schedule is split, keep a day count.
No agreement? The resident credit, and why it feels worse
If your pair is not in the table, the fallback is the credit for taxes paid to another state.
You file a nonresident return in the work state, a resident return at home, and claim a credit on the resident return for the tax you paid the other jurisdiction. New York uses Form IT-112-R. New Jersey uses Schedule NJ-COJ.
Everything turns on the cap. New Jersey’s wording is the clearest: you compare the credit limitation amount to the actual tax paid to the other jurisdiction, and “you can claim a credit of the lesser of the two amounts.” Elsewhere the state puts it even more plainly, saying your credit cannot be more than you would have paid had you earned the income in New Jersey.
Translate that and it means you effectively pay the higher of the two states’ rates. The credit prevents double taxation. It does not get you down to the cheaper state’s number.
Timing is the practical difference that matters most:
- With reciprocity, the paycheck itself is fixed. One state withholds, and if the work state took money anyway, you recover it as a straight refund claim, because no tax was ever owed. New Jersey spells out the path for Pennsylvania residents: file a New Jersey nonresident return with a signed statement that you are a resident of Pennsylvania.
- With the resident credit, both states withhold all year long and the whole thing is trued up only when you file. Your take-home is smaller every payday in the meantime.
One more wrinkle: the two are mutually exclusive. Virginia says that if you have District of Columbia income and you meet the criteria for exemption under reciprocity, you cannot claim the credit for it. You get one road or the other, not both.
Put a dollar figure on it before you chase paperwork
To decide whether any of this is worth a conversation with payroll, see the two scenarios side by side in dollars.
That is what Salary Calculator (Stub44) is built for. It models one state per profile with full federal, state and FICA math across all 50 states plus DC, so save two profiles, “home state withholding” and “work state withholding,” and read the gap in net pay. Reciprocity is precisely the rule that tells a cross-border commuter which of those two profiles is the correct one.
If you are weighing a job across a state line rather than fixing a current stub, the remote work state tax tool and the state relocation take-home comparison cover the same ground before you sign anything. Our posts on relocating and state taxes and comparing remote job offers across states go deeper on the offer-stage version of this question, and if your withholding is off for reasons unrelated to state lines, start with paycheck withholding mistakes and adjusting your W-4.
Ready to run your own two-state comparison? Download Salary Calculator and check what the certificate is actually worth to you.
Frequently Asked Questions
Which states have reciprocal tax agreements in 2026?
About 30 agreements exist among 15 states plus the District of Columbia, per the Tax Foundation. They cluster in three places: the DC metro area (DC, Maryland, Virginia, West Virginia), the Midwest around Kentucky, Michigan, Ohio, Indiana, Illinois and Wisconsin, and the New Jersey to Pennsylvania corridor. Kentucky has the most partners at seven.
What happens to my paycheck if I never filed the reciprocity exemption form?
Your employer keeps withholding for the work state, because withholding follows where you physically work unless a certificate says otherwise. You get that money back only by filing a nonresident return in the work state the following spring. Meanwhile your home state tax may be underwithheld, so you can end up short in both directions.
Does a reciprocity agreement cover local or city income taxes?
No. Reciprocity is a state-level arrangement, and city, municipal, school district and occupational taxes run on their own rules. New Jersey states plainly that its Pennsylvania agreement does not apply to the Philadelphia wage tax or any other Pennsylvania municipality, and Indiana says its agreements do not cover Indiana local income tax.
Do New York and New Jersey have a reciprocity agreement?
No. New York has no reciprocity agreement with any state, and it also applies a convenience-of-the-employer rule to nonresident telecommuters. This is the single most common wrong assumption in this topic. New York and New Jersey commuters use the resident credit instead.
Do I still have to file a state tax return where I work?
Usually not, once a valid certificate is on file and wages are your only connection to that state. You file a resident return at home only. If work-state tax was already withheld, you do have to file a nonresident return there to claim the refund.
Does reciprocity apply if I only go into the office two days a week?
It depends on the pair and on whether either state has a convenience-of-the-employer rule. Reciprocity was written for people who cross a state line five days a week, so hybrid schedules can require day tracking, and some states impose day-count or daily-commuter conditions. Kentucky's Virginia agreement, for example, covers daily commuters only.
Do I have to refile the exemption form every year?
In some states, yes. Minnesota's Form MWR is due by February 28 every year, and North Dakota, Montana, Arizona and Virginia also want a new form annually. Pennsylvania explicitly does not require reciprocal-state residents to refile unless their state of residence changes.
Does reciprocity change my federal taxes or Social Security?
No. Federal income tax withholding, Social Security and Medicare are completely unaffected. Reciprocity is strictly an arrangement between two state income tax systems, and it does not touch anything on the federal side of your stub.