Living in one state and working in another

The basic rule

Two states can have a claim on the same paycheck:

• Your work state can tax wages for work physically done there. This is called source income.
• Your home state taxes residents on all their income, wherever they earn it.

To prevent double taxation, the home state usually gives a credit for taxes paid to another state. New Jersey, for example, reduces a resident’s New Jersey withholding by the other state’s withholding, and Vermont does the same for residents working partly outside Vermont. If the work state’s tax is lower than your home state’s, you pay the difference to your home state. If it’s higher, the credit usually wipes out your home-state tax on those wages, and the work-state tax is what you pay.

In practice, the employer withholds for the work state, and you file a nonresident return there and a resident return at home.

Reciprocity agreements

Some neighboring states agree not to tax each other’s residents. With reciprocity, you give your employer an exemption form, the employer withholds only your home state’s tax, and you file only at home.

*Kentucky exempts Virginia residents only if they commute daily, and Ohio residents unless they own 20% or more of an S corporation that employs them. Maryland’s agreement with Pennsylvania covers the state portion of the tax only.

Things to know:

• Washington, D.C. doesn’t tax nonresidents’ wages at all. You file Form D-4A with your employer. The exception is anyone who keeps a home in D.C. for 183 days or more in the year, who is treated as a resident.
• Wisconsin and Minnesota have no reciprocity, but a Wisconsin resident’s Minnesota wages that have Minnesota tax withheld don’t also need Wisconsin withholding.
• Reciprocity covers state income tax only. Local taxes can still apply at the work location: Indiana county tax, Ohio municipal tax, Kentucky occupational license taxes and Pennsylvania local earned income tax.
• No form, no exemption. Without the exemption form, your employer withholds for the work state, and you’ll have to file there to get it back.

Remote work

The general rule is that wages are sourced to the place where you physically do the work. If you live in one state and work from home for a company based in another, your home days are usually taxed only by your home state. Several states put this in writing. Colorado, for example, apportions nonresidents’ wages by days physically worked in Colorado, and telecommuting days outside the state aren’t Colorado wages.

Convenience-of-employer rules

A few jurisdictions take a different approach. Under a convenience-of-the-employer rule, a day you work from home counts as a day worked at the office location, unless the employer required you to work remotely. Our state data shows this rule in Wilmington, Delaware’s city wage tax: work-from-home days count as Wilmington days unless the employer certifies the remote work was required or for its convenience.

If your employer is based in a state that applies a rule like this, remote days can be taxed by that state even though you never set foot there. Your home state’s credit then becomes the safety net. Check your employer’s state rules before assuming remote days are taxed only at home.

Short trips and small amounts

Many states don’t require withholding for nonresidents who work there only briefly. Thresholds in our 2026 data include:

• Connecticut: 15 days or fewer.
• Illinois: 30 working days or fewer.
• Indiana: 30 days or fewer.
• West Virginia: 30 days or fewer, for people working in more than one state.
• Georgia: wages are taxable only if more than 5% of your pay, or more than $5,000, is from Georgia work.
• Wisconsin: no withholding if expected Wisconsin earnings are under $1,500 a year.

Examples

Live in Pennsylvania, work in New Jersey

Pennsylvania and New Jersey have reciprocity. You give your New Jersey employer the exemption form, it withholds Pennsylvania income tax (3.07%) instead of New Jersey tax, and you file only in Pennsylvania for state income tax.

Live in New Jersey, work in New York City

There’s no reciprocity, so New York State withholds tax on your New York wages. New York City’s own income tax applies only to city residents, so a commuter pays state tax only. New Jersey taxes you as a resident but credits the New York tax, so you aren’t taxed twice on the same pay.

Live in Washington, work in Portland, Oregon

Washington has no income tax, so there’s no credit to offset Oregon’s. You pay Oregon income tax on your Oregon wages, plus the 0.1% statewide transit tax on Oregon work. Days you work from home in Washington aren’t Oregon work.

Live in Indiana, work in Louisville, Kentucky

Indiana and Kentucky have reciprocity, so Kentucky doesn’t withhold state income tax; you pay Indiana tax (2.95% plus your county). Louisville’s occupational license tax still applies to work done there, because reciprocity doesn’t cover local taxes.

Getting your paycheck right

1. Tell payroll your home address and where you actually work, including remote days.
2. If your states have reciprocity, file the exemption form with your employer.
3. Without reciprocity, check that your home state is withheld too if the credit won’t cover it all, or make estimated payments.

To see the taxes on a single job, pick the work state in the paycheck calculator. Each state page lists its 2026 sources, and our methodology explains how we check them. Moving to a state with no income tax? That guide covers what still comes out.