State tax reciprocity agreements (2026)

What happens when there is no agreement?

Both states tax the same wages. The work state taxes you as a nonresident on what you earned there, your home state taxes everything, and your home state then credits the tax you already paid, capped at what it would have charged itself. Pay the higher of the two rates, in other words, rather than both. Three corridors are common enough that the calculator models them directly:

• Live in New Jersey, work in New York

  Nonresident return: NY Form IT-203

  Credit claimed on: Schedule NJ-COJ on the NJ-1040

• Live in Connecticut, work in New York

  Nonresident return: NY Form IT-203

  Credit claimed on: Schedule 2 on the CT-1040

• Live in New York, work in New Jersey

  Nonresident return: NJ Form NJ-1040NR

  Credit claimed on: Form IT-112-R filed with the IT-201

New York adds a wrinkle that catches hybrid schedules. Under its convenience-of-the-employer rule, a day you spend working at home for a New York employer is still treated as a New York workday unless the employer required you to be somewhere else. A New Jersey or Connecticut resident who works two days a week at the kitchen table can therefore still owe New York on those days, and the credit at home moves with it. That rule is the single biggest reason these two commutes go wrong on paper.

Why the District of Columbia sits outside all of this

The District taxes residents only. Congress barred it from taxing the wages of people who work there and live elsewhere, so there is no District commuter tax for any state to negotiate an exemption from. That is one structural fact rather than fifty agreements, which is why it is a note here instead of fifty rows in the table.

Maryland and Virginia residents have explicit agreements with the District in the table above. Residents of every other state reach the same result structurally, by filing DC Form D-4A with the District employer so nothing is withheld in the first place. Either route ends in the same place: the District collects nothing on a nonresident's wages, and your home state taxes them in full.

How do you actually claim the exemption?

File the certificate with your employer, not with a tax office. It is a payroll document: your employer keeps the signed copy and stops withholding the work state's income tax from the next check it processes. Nothing is mailed to the work state and nothing is attached to your return.

Employers do not apply an agreement on their own, and payroll systems default to withholding for the state where the work happens. Skip the certificate and the work state takes its tax from every paycheck, which you then recover by filing a nonresident return in the spring - a refund of money you never owed, several months late.

Some certificates expire. Where an agreement requires annual renewal, the exemption lapses on its own unless a fresh form is filed, and payroll quietly resumes withholding. Moving house matters too: the exemption is a claim about where you live, so a move across the line makes the old certificate wrong and nobody in payroll will notice for you.

What reciprocity does not cover

An agreement removes the work state's income tax and reaches nothing else. City and county wage taxes are levied under separate authority and survive it untouched. Three of them reach across a state line often enough to matter: the Philadelphia wage tax, which every Pennsylvania agreement leaves in place at the nonresident rate; Ohio's municipal tax, which is owed where the wages are earned rather than where the earner sleeps; and Indiana's county tax, which IN Form WH-47 does not cover. A commuter whose state tax is genuinely zero can still owe thousands locally.

Federal income tax and FICA sit outside all of this as well. Reciprocity is an arrangement between two state treasuries and has no effect on what the IRS collects, so the federal line on your pay stub looks the same whichever side of the border you work on.