Reciprocity
Do Maryland and Delaware Have a Tax Reciprocity Agreement?
No. Delaware has no reciprocal wage agreement with any state, and Maryland does not list Delaware as a reciprocal state. The Maryland 2025 Nonresident Tax Forms and Instructions treat only the District of Columbia, Pennsylvania, Virginia, and West Virginia as reciprocal states for wage income. Delaware residents who work in Maryland must file a Maryland nonresident return, and their Maryland employer must withhold Maryland income tax.
Because no reciprocity exists, Form MW507 cannot be used by a Delaware resident to exempt Maryland wages from Maryland withholding. Line 4 of MW507 is only for residents of the District of Columbia, Virginia or West Virginia who work in Maryland and do not keep a place of abode there for 183 days or more. Pennsylvania residents use a separate line and still owe withholding at the rate of the Maryland county where they work. Maryland's Compliance Division reviews exemption certificates and notifies you if a change is required.
Which Returns
Which Tax Returns Does a Delaware Resident File?
| Return | State | Form |
|---|---|---|
| Nonresident return | Maryland | Form 505 with Form 505NR |
| Resident return | Delaware | Form PIT-RES |
| Credit for tax paid to other state | Delaware return | PIT-RES, Line 28 |
Prepare the Maryland nonresident return first. You need the final Maryland state tax figure to complete Line 28 on Form PIT-RES, and the Delaware Division of Revenue requires the Maryland return as an attachment. Form 505 uses Form 505NR to compute the Maryland tax on the nonresident share of income, with the Maryland Nonresident Factor allocating income between Maryland and non Maryland sources.
On Form PIT-RES, report income from all sources. The Delaware credit for taxes paid to another state on Line 28 then reduces your Delaware tax by the Maryland state tax attributable to the Maryland source income. Delaware will disallow the credit unless a signed copy of the Maryland return is attached.
Special Nonresident Tax
What Is the Maryland Special Nonresident Tax and How Much Is It?
Most nonresidents do not pay a Maryland county income tax. In its place, Maryland assesses a Special Nonresident Tax on Form 505NR. The 2025 Form 505NR instruction for Line 17 reads: Special nonresident tax. Multiply Line 13 of this form by 0.0225. That works out to a flat 2.25 percent of your Maryland taxable net income, entered on Form 505, Line 32b.
Wilmington residents are the exception. Wilmington taxes the wages of Maryland residents who work there, so Wilmington residents employed in Maryland must file Maryland Form 515 and pay a local income tax instead of the Special Nonresident Tax.
The Special Nonresident Tax is on top of the regular Maryland state income tax computed on Form 505NR. Whether Delaware's Line 28 credit also covers it, Delaware does not say explicitly. Its FAQ mentions the Special Nonresident Tax in the answer about the credit, but its instructions also say taxes paid to a political subdivision of a state cannot be claimed. The regular Maryland state tax on your Maryland wages clearly qualifies.
The Maryland Nonresident Factor on Form 505NR allocates the Maryland tax between Maryland source and non Maryland source income. Keep your W-2 and any workday allocation records available. For a comparison of the Special Nonresident Tax to the county rates that residents pay, see our Maryland county income tax rates page.
Delaware Credit
How Does Delaware's Credit for Other State Tax Work on Form PIT-RES?
Delaware credits taxes imposed by another state on income also subject to Delaware tax. On the 2025 Form PIT-RES the credit goes on Line 28, and a signed copy of the Maryland return must be attached. The Division of Revenue's FAQ still names line 27 from an older form.
The credit is limited to the Delaware tax on the same income. Delaware taxes personal income using a graduated schedule that starts at 2.2 percent above $2,000 and reaches 6.60 percent for income of $60,000 or over. If the combined Maryland state tax and Special Nonresident Tax on your commute wages are higher than what Delaware would have charged on that same slice of income, the credit is capped at the Delaware amount.
If the Maryland side is lower than the Delaware ceiling, the credit equals the Maryland tax paid and Delaware collects the difference. Delaware's own residency filing threshold and standard deduction still apply to the Delaware side.
Employer Withholding
How Should My Maryland Employer Handle Withholding?
Your Maryland employer withholds Maryland income tax on wages earned in Maryland. Because Delaware residents are not eligible for the MW507 reciprocity exemption, the Maryland employer cannot shift withholding to Delaware at your request. If you also work occasional days from a Delaware home office, only the Maryland workdays are Maryland source income; talk with payroll if the Delaware share becomes large.
Delaware does not require your Maryland employer to withhold Delaware tax. You may either make Delaware estimated payments during the year using Delaware's estimated payment vouchers to keep your balance due small, or wait to reconcile at filing time on Form PIT-RES. The Delaware credit for the Maryland tax paid usually keeps the year end Delaware balance modest.
Check your first pay stub. Maryland state withholding should appear on the state tax line. If Delaware is showing instead, ask payroll to change your state code so Maryland withholding starts, or you will owe Maryland at filing time and face underpayment interest.
Worked Example: Delaware Resident Earning $80,000 in Baltimore County
| Line item | Amount |
|---|---|
| Gross wages (all Maryland source) | $80,000 |
| Maryland state tax on $80,000 (Schedule I) | $3,747.50 |
| Maryland Special Nonresident Tax at 2.25% | $1,800.00 |
| Total Maryland tax before credits | $5,547.50 |
| Delaware tax on $80,000 (top bracket 6.6%) | $4,263.50 |
| Delaware PIT-RES credit for Maryland tax (capped at DE amount) | $4,263.50 |
| Delaware tax after credit on the Maryland source wages | $0.00 |
| If only the regular Maryland tax counts: Delaware tax after credit | $516.00 |
Single filer, all wages from a Maryland employer, 2025 Maryland Tax Rate Schedule I and 2025 Delaware bracket schedule applied before deductions and exemptions. Assumes the Special Nonresident Tax counts toward Delaware's credit; the last row shows the result if it does not. Illustrative only.
Remote Work
What If I Work Remotely from Delaware for a Maryland Employer?
Maryland taxes a nonresident on income derived from services performed in Maryland. Delaware has a convenience rule of its own, but it concerns nonresidents who work for Delaware employers, so it does not change anything for you as a Delaware resident.
If your workweek is split between a Maryland office and a Delaware home office, allocate wages by the number of days worked in each location. Report only the Maryland share as Maryland source income on Form 505 using the Maryland Nonresident Factor on Form 505NR. The Delaware share is taxed only by Delaware. Keep a written log of workdays by state; either state may request it during a review.
See our convenience of the employer rule guide for the states that apply this rule.
Mid Year Move
What If I Move Between Delaware and Maryland During the Year?
If you change your permanent home between Delaware and Maryland during the year, file as a part year resident in each state. In Maryland, complete Form 502 as a resident for the period you lived in Maryland and Form 505 as a nonresident for the period you did not, with exemptions prorated across both returns per the Nonresident Booklet instructions. Delaware lets part-year residents choose between a resident return (PIT-RES), as if they had lived in Delaware all year, and a nonresident return (PIT-NON), and suggests preparing both and filing the one that is more advantageous.
Document your move date with a lease, mortgage settlement statement, utility activation, or driver's license change. Each state's claim to a given day of wages depends on which state you were a resident of that day. The Delaware credit on Line 28 of Form PIT-RES still applies to the Delaware resident portion of the year that included Maryland source wages. If your move crosses the December 31 line, keep the last pay stub of the year: it fixes the split between Maryland and Delaware source wages before your final W-2 arrives.
Withholding Errors
What If My Employer Withheld for the Wrong State?
If your Maryland employer mistakenly withheld Delaware tax instead of Maryland tax, you will owe Maryland the full amount at filing time and Delaware will show an overpayment. Claim the wrongly withheld Delaware amount as a payment on Form PIT-RES and pay Maryland with Form 505. Ask payroll to fix the state code and update year to date figures so the shortfall does not repeat next quarter.
If no state tax was withheld at all, a common payroll setup error when a Delaware address is entered as the work address, you will owe both states at filing time. Set up Maryland estimated payments through the Comptroller's online system, and Delaware estimated payments through the Division of Revenue, to keep your balance due below the underpayment interest threshold in future years. Catching the error early keeps the balance due small.
Questions
Work in Maryland, Live in Delaware: How the Taxes Work FAQ
Do Maryland and Delaware have a tax reciprocity agreement?
No. Delaware has no reciprocity agreement with any state, and Maryland lists only the District of Columbia, Pennsylvania, Virginia, and West Virginia as reciprocal states in its 2025 Nonresident Instructions. A Delaware resident who works in Maryland must file Maryland Form 505 with Form 505NR as a nonresident, then credit the Maryland tax paid on Line 28 of Delaware Form PIT-RES.
Can I use Maryland Form MW507 to stop Maryland withholding?
No. Line 4 of MW507 is only for residents of the District of Columbia, Virginia or West Virginia who do not keep a Maryland place of abode for 183 days or more, and Pennsylvania residents use a separate line. A Delaware resident cannot claim either. Your Maryland employer withholds Maryland income tax, and you reconcile with a credit on your Delaware return.
What is the Maryland Special Nonresident Tax rate?
It is 2.25 percent of Maryland taxable net income, computed on Line 17 of Form 505NR (Multiply Line 13 of this form by 0.0225) and carried to Line 32b of Form 505. It replaces the county income tax that Maryland residents pay. Delaware does not say explicitly whether it counts toward the Line 28 credit on Form PIT-RES.
Do I have to attach my Maryland return to my Delaware return?
Yes. The Delaware Division of Revenue FAQ requires a signed copy of your Maryland return as an attachment before the Line 28 credit on Form PIT-RES will be allowed. Prepare the Maryland return first so you have both the final Maryland tax figure and the signed copy ready when you file with Delaware.
Which state return should I file first?
File the Maryland nonresident return first. You need the final Maryland state tax and Special Nonresident Tax amounts, plus a signed copy of the Maryland return itself, to complete Line 28 on Delaware Form PIT-RES. Delaware will not release the credit without the attached Maryland return.
Does working remotely from Delaware lower my Maryland tax?
Yes. A nonresident individual is subject to Maryland tax on federal adjusted gross income derived from services performed in Maryland. Days worked from your Delaware home are Delaware source income and are not on Form 505. Delaware's own convenience rule concerns nonresidents working for Delaware employers, so it does not reassign these days. Keep a workday log by state.
Do I owe Maryland county income tax on my commute wages?
Usually not. Most nonresidents pay the Special Nonresident Tax of 2.25 percent on Form 505NR instead of a county tax. Wilmington residents are the exception: they file Maryland Form 515 and pay a local income tax instead. Delaware residents also owe Delaware state income tax on the same wages, reduced by the Line 28 credit on Form PIT-RES.
- Sources: Delaware Division of Revenue: Personal Income Tax FAQs · Delaware Division of Revenue: Tax Rate Changes · Maryland Comptroller: 2025 Nonresident Tax Forms and Instructions · Maryland Comptroller: 2025 Form 505NR Nonresident Income Tax Calculation · Maryland Comptroller: 2025 Form 505 Nonresident Income Tax Return · Comptroller of Maryland: Tax Tip 56 · Comptroller of Maryland: Form MW507 · Comptroller of Maryland: 2025 Resident Tax Booklet · Delaware Division of Revenue: PIT-RES Instructions 2025
- Last updated September 24, 2026
← Back to the full salary calculator · Related: State reciprocity agreements list · Maryland county income tax rates · Convenience of the employer rule