Work in New York, Live in Pennsylvania: How Taxes Work

Reciprocity

Do Pennsylvania and New York Have a Tax Reciprocity Agreement?

No. Pennsylvania publishes its list of reciprocal compensation agreement states in the PA-40 instructions, and New York is not on it. The PA states that recognize reciprocity are Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. New York, for its part, publishes no reciprocity agreement with any bordering state.

The practical effect for a PA resident with a New York employer: you cannot ask your NY employer to skip New York withholding and remit only PA tax. New York gets the first claim on wages earned inside its borders. Pennsylvania then taxes you as a resident on all income from every source, and the state uses the Resident Credit on PA-40 Line 22 to prevent the same wages from being taxed twice at both states' full rates.

Filing Obligations

Which Returns Do I File as a PA Resident Working in NY?

You file two state returns each year. The New York nonresident return uses Form IT-203, on which you report only income sourced to New York. The Pennsylvania resident return uses Form PA-40, on which you report all income from every source worldwide.

File the New York IT-203 first. You need the final NY tax figure to complete the PA Schedule G-L calculation. The PA-40 instructions state that you must submit a photocopy of each other-state return along with the PA Schedule G-L when you claim the credit. Miss the attachment and Pennsylvania may deny the credit.

Both returns share the federal April 15 due date. A federal extension automatically extends the PA-40 filing deadline; New York recognizes a filed federal extension for the state as well, but you should confirm any state estimated payment balances by that date so late-payment penalties do not accrue.

Resident Credit

How Does PA Schedule G-L Prevent Double Taxation?

The PA-40 Line 22 Resident Credit works by limiting your Pennsylvania tax on your NY-source wages to the lower of two amounts. It is the lesser of the tax you actually paid to New York on those wages, or the Pennsylvania tax that would apply to the same wages at PA's flat 3.07 percent rate.

In almost every real case, the NY tax exceeds the PA tax on the same wages, because New York uses graduated rates that climb well above 3.07 percent, while Pennsylvania taxes all compensation at that single flat rate. Your PA Schedule G-L credit therefore usually equals the full PA tax on that income, and your PA balance on those wages drops to zero.

You still owe Pennsylvania on any income that is not NY-sourced. Investment income earned while a PA resident, self-employment tied to a Pennsylvania location, or a second job worked inside PA all remain subject to the 3.07 percent PA rate with no credit, because those dollars were never taxed by New York.

Attach a legible photocopy of the completed IT-203 to your PA-40. Complete a separate PA Schedule G-L for each state where you claim a credit. Pennsylvania instructs filers to submit the schedule and the other-state return together, and the department may disallow the claim if either is missing.

Employer Withholding

What Withholding Should My NY Employer Take From My Wages?

Your NY employer must withhold New York State income tax on wages you earn for services performed inside New York. There is no PA exemption form your NY employer can accept to skip this obligation, because the reciprocal-state statement (Pennsylvania's REV-419) applies only when the work state has an agreement with PA. New York does not.

Because no PA tax is withheld from your paycheck, you may owe Pennsylvania a small balance on any income that is not fully covered by the NY credit. In particular:

• Interest, dividends, and other unearned income earned during PA residency generate PA tax at 3.07 percent with no offsetting NY credit.
• Wages for occasional workdays performed inside Pennsylvania (a home office day where the convenience rule does not push the income back to NY) may still generate PA tax without NY withholding.
• For tax year 2026, PA requires quarterly estimated payments on Form PA-40 ES(I) if you can reasonably expect to owe at least $430 in tax after subtracting withholding and credits, which corresponds to $14,000 of income not subject to employer withholding.

Local Pennsylvania earned income tax collectors (EITs) also require quarterly filings from most resident wage earners. Contact your municipality's tax collector to confirm the local rate and payment schedule for your township or borough.

Remote Work

How Does NY's Convenience of the Employer Rule Affect Me?

New York applies a convenience of the employer test to nonresident telecommuters. Under the rule, if your primary office is in New York State, your telecommuting days are treated as days worked in New York unless your employer has established a bona fide employer office at your telecommuting location. Working from your PA home for your own convenience does not remove those days from NY-source income.

The New York Department of Taxation and Finance publishes the factors it weighs to decide whether a home office qualifies as a bona fide employer office. In general, unless the employer specifically acts to establish that office as a business necessity, telecommuting days continue to owe New York income tax.

For a PA resident with a fully remote NY job, this usually means all your wages remain NY-sourced. Pennsylvania then gives you the Schedule G-L credit for the NY tax, and your total state tax stays close to what a full-time NY commuter would pay. If your employer requires the remote setup for genuine business reasons and documents that requirement, some or all of your remote days may be reclassified out of NY, reducing NY tax and shifting more of your total tax to Pennsylvania at the lower 3.07 percent flat rate.

Worked Example: PA Resident Earning $80,000 in New York

Single filer, all wages sourced to NY, PA at flat 3.07 percent, NY tax computed from the IT-203 tax tables

Mid-Year Move

What If I Moved Between PA and NY During the Year?

If you changed your permanent residence between Pennsylvania and New York during the tax year, file a part-year return in each state. Pennsylvania uses PA-40 and asks part-year residents to report income earned during the PA-resident portion of the year. New York uses the same IT-203 form for both nonresident and part-year resident filings.

During your PA-resident months, Pennsylvania taxes all income you received. During your NY-resident months, New York taxes all your income as a resident, not just NY-sourced wages. The overlap period where both states could claim the same wages is handled by the resident credit on the state where you were resident when the income was earned.

Document the exact date your residence changed. Utility bills, a signed lease, a driver's license update, and voter registration changes all help you defend the split if either state questions the timing.

Withholding Errors

What If My Employer Withheld Only PA Tax by Mistake?

If your employer treated you as a Pennsylvania employee and withheld only PA tax, you will owe New York a large balance when you file IT-203. Report the full NY wages, calculate the NY tax due, and pay the shortfall with the return. Ask your employer to correct future paychecks so New York withholding starts immediately.

On the PA side, you already paid PA tax through withholding. When you file PA-40, apply the Schedule G-L credit for the NY tax you just paid on the return. The credit reduces or zeros your PA tax on those NY-sourced wages, and the PA withholding you already paid becomes an overpayment that Pennsylvania refunds.

Interest may still accrue on the NY balance due, because NY expects wage tax to be paid through withholding as the year goes on. Requesting an installment agreement with the NY Department of Taxation and Finance limits the collection cost while you catch up.

Local Taxes

Do NYC, Yonkers, or Philadelphia Local Taxes Apply?

New York City income tax and the Yonkers resident surcharge apply only to residents of those cities. A Pennsylvania resident who commutes to a Manhattan office pays no NYC income tax, and a PA resident working in Yonkers pays no Yonkers resident tax. Your only New York obligation is the state-level tax on IT-203.

Pennsylvania localities are the other side of the coin. Almost every PA municipality levies a local earned income tax (EIT) collected by a designated tax collector. As a PA resident, you owe the EIT on your wages regardless of where the wages were earned. Some municipalities credit tax paid to another state or city against the local EIT; others do not. Check with your local tax collector for the rules that apply to your township.

Philadelphia is a special case. Philadelphia residents owe the Philadelphia Wage Tax on all wages earned anywhere, and Philadelphia offers a partial credit for state tax paid to states other than PA. If you live in Philadelphia and work in New York, review the Philadelphia Department of Revenue rules to compute the credit against your Philadelphia liability. For details on the statewide EIT framework, see our Pennsylvania local earned income tax explainer.