The form
How do I file MW507 to claim the MD-VA reciprocity exemption?
MW507 is Maryland's Employee's Maryland Withholding Exemption Certificate. Virginia residents use Section (e) of this form to claim reciprocity exemption. Here is the process:
- Obtain Form MW507 from the Comptroller of Maryland website or your employer's HR department.
- Complete the form. In the exemption section, indicate that you are a resident of Virginia and claim exemption from Maryland withholding under the reciprocity agreement. Write "EXEMPT" in the appropriate line.
- Submit MW507 to your employer's payroll department. They will stop withholding Maryland state and county tax.
- Also provide Virginia Form VA-4 so your employer can calculate and withhold Virginia income tax correctly.
- Verify your next pay stub shows VA withholding and zero MD withholding.
File MW507 at the start of employment. If you delay, Maryland tax accumulates and you will need to file a Maryland nonresident return to reclaim it.
What about Maryland's county income tax — does reciprocity cover it?
Maryland counties levy a local income tax that piggybacks on the state income tax. The county tax rate varies by county. Because the reciprocity agreement exempts you from Maryland state income tax, and the county tax is calculated as a percentage of the state tax base, the county piggyback tax also does not apply. No Maryland state base means no county tax base.
This is a clean outcome compared to border crossings like Ohio-Kentucky, where state reciprocity leaves local taxes untouched. In the MD-VA case, reciprocity effectively eliminates both the Maryland state and county tax layers.
How do Virginia and Maryland tax rates compare for DC-area commuters?
Virginia uses graduated brackets with a top marginal rate that is generally lower than Maryland's top state rate. Maryland's effective rate is further increased by the county piggyback, which can add several percentage points. For most income levels, Virginia residents who work in Maryland are better off under reciprocity — paying Virginia's rates is usually lower than the combined Maryland state-plus-county rate.
At very low incomes the difference may be small. The benefit grows at higher incomes where Maryland's county piggyback makes a meaningful difference. Use the Virginia salary calculator and Maryland salary calculator to compare estimates.
(Verify current VA brackets at tax.virginia.gov.)
What if my Maryland employer already withheld MD tax?
If MD tax was withheld before you filed MW507:
- File MW507 immediately to stop further Maryland withholding.
- At year-end, file Maryland Form 505 (Nonresident Income Tax Return) showing zero Maryland-taxable wages under reciprocity. Claim a full refund of the MD withholding.
- File Virginia Form 760 as normal. If VA tax was under-withheld, pay the balance.
What if I also work in DC some days — how does that interact?
Many DC-area workers split their time between Maryland, Virginia and the District. The good news: DC does not tax nonresidents. If you are a Virginia resident and you work some days in DC and some in Maryland, neither jurisdiction taxes your wages (DC exempts nonresidents entirely, and Maryland is covered by reciprocity). You owe income tax only to Virginia on all your wages.
For more on the DC-specific situation, see work in DC, live in Virginia. For the reverse direction (MD residents working in VA), see work in Virginia, live in Maryland.
Does reciprocity apply to remote workers in the MD-VA corridor?
Yes. If you are a Virginia resident employed by a Maryland company and you work from your Virginia home, reciprocity still covers your wages. Whether you commute to an office in Maryland or work remotely from Virginia, you owe income tax only to Virginia. File MW507 with your employer regardless of your work location.
Neither Maryland nor Virginia applies a "convenience of the employer" rule like New York does. Your physical location on a given day does not change the reciprocity treatment for wage income.
Questions
MD-VA reciprocity FAQ
Do I file a Maryland tax return if I live in Virginia and work in Maryland?
No, as long as your only Maryland income is wages or salary covered by the reciprocity agreement and you have filed MW507 with your employer. You file only a Virginia resident return (Form 760). If you have other Maryland-source income such as rental property, you may need a Maryland nonresident return for that income.
What is Form MW507 and how do I use it?
MW507 is Maryland's Employee's Maryland Withholding Exemption Certificate. Virginia residents use it to claim exemption from Maryland income tax withholding under the reciprocity agreement. Complete the form indicating you are a Virginia resident, then submit it to your Maryland employer's payroll department. They will stop withholding Maryland tax and begin withholding Virginia tax.
Does Maryland have any local taxes that reciprocity does not cover?
Maryland counties levy a local income tax piggyback on the state income tax. However, because the reciprocity agreement exempts you from Maryland state income tax, you are also exempt from the county piggyback tax — it cannot apply if there is no state tax base. So for wage income, reciprocity effectively covers both Maryland state and local taxes.
Which is higher — Virginia or Maryland income tax?
Both states use graduated brackets. Virginia's top rate is generally lower than Maryland's combined state plus county rate. However, the comparison depends on your specific income level and the Maryland county where you would otherwise owe local tax. Under reciprocity you pay Virginia's rates regardless, which for many commuters means a lower effective state tax rate.
What if I work in both Maryland and DC during the week?
If you split your work between Maryland and DC, you may have two separate situations. DC does not tax nonresidents, so DC workdays generate no DC tax liability. Maryland workdays are covered by the MD-VA reciprocity agreement. The net result is that you owe only Virginia state income tax on all your wages, provided both employers have the correct withholding exemptions on file.
- Sources: Comptroller of Maryland (MW507, reciprocity) · VA Dept. of Taxation (Form 760, VA-4) · MD county income tax schedules.
- 🔄 Last updated July 31, 2026 · Tax year 2026
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