Reciprocity agreement

A reciprocity agreement works through your employer’s payroll. You give your employer the work state’s exemption certificate, so it stops withholding that state’s tax. Some certificates must be renewed each year, such as Virginia’s Form VA-4 and Minnesota’s Form MWR. If the work state’s tax is withheld anyway, you file with that state to get it back.

In 2026, the main agreements link the District of Columbia and 15 states. They are Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Montana, New Jersey, North Dakota, Ohio, Pennsylvania, Virginia, West Virginia and Wisconsin. An agreement must be between the two states you live and work in. Minnesota and Wisconsin, both on the list, have none with each other. New Jersey’s only agreement is with Pennsylvania. New Jersey residents who work in New York owe New York tax on that pay.

An agreement covers only what you earn as an employee, such as wages and bonuses. Self-employment income and gains on property in the work state can still need a nonresident return there. Local income taxes can fall outside an agreement: Indiana’s agreements do not cover its county taxes. Some agreements add conditions. Virginia exempts Maryland, Pennsylvania and West Virginia residents only if their Virginia income is all wages. They must also spend 183 days or fewer in Virginia and keep no home there.