State Tax Reciprocity Agreements: 2026 Guide

If you live in one state and commute across the border to work in another, you can easily end up worrying about being taxed twice. The good news: many neighboring states have signed reciprocity agreements that let you pay state income tax only where you live, not where you work. This guide explains how those agreements work, which states have them, and the one form that keeps the wrong state from withholding from your paycheck.

What is state tax reciprocity?

A reciprocity agreement is a deal between two states that says: residents of State A who work in State B only owe income tax to State A, and vice versa. It removes the default rule, which is that you usually owe income tax to both the state where you earn the money (your work state) and the state where you live (your resident state). With an agreement in place, your work state agrees not to tax your wages so your home state can tax them instead.

Why it matters for your paycheck

Without reciprocity, your employer withholds income tax for the state where you physically work. You then file a nonresident return in that state and a resident return at home, and claim a credit so you are not taxed twice. It usually nets out, but your money is tied up until you file. With a reciprocity agreement, your employer can withhold for your home state from the start — so your take-home pay each period already reflects the right amount, and you skip the extra nonresident return entirely.

How to set it up: the exemption form

Reciprocity is not automatic. You have to tell your employer to stop withholding for the work state by filing that state's nonresident withholding exemption certificate.

1. Confirm your home state and work state have an active agreement (see the table below).
2. Ask your payroll or HR department for the work state's nonresident exemption form — for example, Form WH-47 in Indiana, Form REV-419 in Pennsylvania, or Form MWR in Minnesota.
3. Complete it with your home-state details and submit it to your employer, not the state.
4. Check your next pay stub to confirm only your home state's income tax is being withheld.
5. Refile the form whenever you move or change jobs — it does not carry over automatically.

Which states have reciprocal agreements

Sixteen states plus the District of Columbia currently honor reciprocity agreements. If your home state appears below and you work in one of its listed partner states, you can file the exemption and pay tax only at home.

The commutes people actually ask about

Agreements are negotiated bilaterally and a few well-known ones have been cancelled, so a border crossing that worked for a colleague years ago may not work for you. These are the pairs that generate the most confusion:

New Jersey and Pennsylvania: how the reciprocal agreement works

New Jersey and Pennsylvania have one of the most-used reciprocal agreements in the country. Wages are taxed only by the state where you live, but your employer will keep withholding for the work state until you file the right certificate with payroll.

• NJ resident working in Pennsylvania: give your employer PA Form REV-419 (Employee's Nonwithholding Application Certificate). Your employer then withholds New Jersey income tax instead of Pennsylvania's 3.07%.
• PA resident working in New Jersey: give your employer NJ Form NJ-165 (Employee's Certificate of Nonresidence in New Jersey). Your employer then withholds Pennsylvania's flat 3.07% instead of New Jersey's graduated rates.
• Philadelphia and other Pennsylvania local earned income taxes are not covered — they are still withheld where you work.

The wrong state withheld tax — how to get it back

If you forgot the certificate or payroll ignored it, the money is not lost. You recover it from the state that withheld it, not through your employer's year-end W-2:

1. File the certificate (REV-419 or NJ-165) with payroll immediately so future paychecks are correct.
2. File a nonresident return in the work state — PA-40 (NJ residents) or NJ-1040NR (PA residents) — reporting zero taxable wages under the reciprocal agreement and claiming a full refund of the withholding shown on your W-2.
3. File your normal resident return at home and pay the home-state tax on those wages; do not claim a credit for the refunded tax.
4. Keep a copy of your W-2 and the certificate — the refunding state may ask for proof of residency.

Do Kansas and Missouri have tax reciprocity?

No. Kansas and Missouri have no reciprocal agreement, which matters for the large Kansas City commuter population. If you live in Kansas and work in Missouri (or the reverse), your employer withholds for the work state, you file a nonresident return there, and your home state gives a credit for tax paid to the other state so the same wages are not taxed twice. Kansas City, Missouri's 1% earnings tax also applies to anyone working in the city, regardless of where they live.

Reciprocity exemption forms: quick reference

These five certificates cover the most common commuter corridors. Each one goes to your employer's payroll department, not to the state.

What if your states have no agreement?

Most state pairs do not have reciprocity — a New York resident working in Connecticut, or a Massachusetts resident working in Rhode Island, for example. You are not taxed twice, but the process is more involved:

• Your employer withholds income tax for the work state.
• You file a nonresident return in the work state reporting the wages earned there.
• You file a resident return in your home state reporting all income.
• Your home state gives you a credit for taxes paid to the other state, so the same dollars are not taxed twice — though you effectively pay the higher of the two rates.

Remote workers should also watch for the 'convenience of the employer' rule used by a few states, including New York. It can tax a remote employee as if they worked at the employer's in-state office even when they never set foot there.

Check net pay with your home state's rate in the calculators for the most common reciprocity states: Pennsylvania, Illinois, Ohio and Wisconsin.