Work in Pennsylvania, Live in Delaware: How Taxes Work

Reciprocity

Do Pennsylvania and Delaware Have a Tax Reciprocity Agreement?

No. Pennsylvania has reciprocal tax agreements with six states: Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. Delaware is not on that list. Separately, Delaware does not have a reciprocity agreement with any state. The Delaware Division of Revenue confirms this in its withholding tax FAQ.

Without reciprocity, both states claim the right to tax the same wages. Pennsylvania taxes nonresidents on compensation earned within the state at a flat 3.07%. Delaware taxes its residents on all income regardless of where it is earned, at graduated rates from 2.2% to 6.6%. A Delaware resident working in PA therefore owes PA nonresident tax and DE resident tax on the same wages, with the overlap resolved through Delaware's credit for taxes paid to other states on Form PIT-RES, Line 28.

The Delaware-Pennsylvania border sees heavy commuter traffic, particularly between Wilmington and the Philadelphia suburbs. Despite this volume, neither state has pursued a reciprocity agreement for wage income. If you are a Pennsylvania resident working in Delaware instead, see our reverse direction guide for the PA credit on Schedule G-L.

Filing Obligations

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

File the Pennsylvania nonresident return first. You need the final PA tax figure to calculate the credit on your Delaware return. On PA-40, report only your Pennsylvania-source wages. If your employer's W-2 does not break out PA wages separately, complete PA Schedule NRH to apportion your compensation between PA and non-PA sources.

On Delaware Form PIT-RES, report all income from every source. Complete the Line 28 worksheet and, if you paid taxes to more than one state, attach Schedule I listing each state and the credit amount in order from highest to lowest. Attach a signed copy of your Pennsylvania return. Delaware will disallow the credit if you do not include the other state's return.

Pennsylvania's return for 2025 is due April 15, 2026. Delaware's is due on or before April 30, 2026 for calendar-year filers. Delaware grants an extension when you file its own Form PIT-EXT before the due date.

Resident Credit

How Does the Delaware Resident Credit Prevent Double Taxation?

Delaware taxes residents on all income at graduated rates up to 6.6%. Pennsylvania taxes nonresidents on PA-source wages at a flat 3.07%. Without a credit, you would pay both rates on the same wages. The Line 28 credit on Form PIT-RES eliminates this overlap.

The credit equals the lesser of:

• The proportional Delaware tax on the income also taxed by Pennsylvania (Line 28 worksheet, Line 5), or
• The actual state income tax you paid to Pennsylvania, net of credits (Line 28 worksheet, Line 6)

Delaware's tax on your income exceeds Pennsylvania's 3.07% once your Delaware taxable income passes roughly $12,700, based on Delaware's rate table, so most full-time earners see the credit equal the full PA tax paid. The credit zeros out the PA overlap, and the remaining Delaware tax reflects the difference between the two rates. Your total state income tax on the shared wages equals the Delaware amount, not both combined.

The credit applies only to state income taxes. City wage taxes and county taxes paid in Pennsylvania are excluded from the Line 28 calculation, and Delaware adds that taxes paid to a political subdivision of a state cannot be claimed as a credit. If you have Delaware-source income that PA did not tax, such as interest from a Delaware savings account, that income is taxed only by Delaware and does not factor into the credit.

Employer Withholding

How Should My Pennsylvania Employer Handle Withholding?

Your Pennsylvania employer withholds PA state income tax at 3.07% on your PA-source wages. This is required for all employees performing services in Pennsylvania, regardless of residence. The employer does not withhold Delaware state income tax from your paycheck.

Because no Delaware withholding comes from your PA employer, your PIT-RES return may show a balance due. If your Delaware tax after the Line 28 credit is large enough to trigger underpayment interest, consider making quarterly estimated payments to Delaware using Form PIT-EST. For 2026, the first quarterly payment is due April 30 and the second June 15. Delaware's instructions name working in another state whose withholding rate is lower than Delaware's as one reason a resident may need to pay estimated tax.

Verify on your first pay stub of the year that Pennsylvania withholding appears on the state tax line and that your Delaware home address is recorded correctly in your employer's payroll system. A missing or incorrect home address can lead to wrong local tax withholding.

Philadelphia Wage Tax

Does the Philadelphia Earnings Tax Apply to Delaware Commuters?

Yes. The City of Philadelphia imposes an earnings tax on wages earned within city limits, and employers must withhold the nonresident rate for employees who work in Philadelphia but live outside the city. For nonresidents, the rate was 3.44% from July 1, 2024, 3.43% from July 1, 2025, and is 3.425% from July 1, 2026.

The Philadelphia earnings tax is separate from Pennsylvania state income tax. It is not creditable on your Delaware PIT-RES return: the Line 28 instructions say not to include city wage taxes or county taxes. For a Delaware resident earning $75,000 in Philadelphia in 2026, the city tax adds roughly $2,570 on top of the PA state and Delaware state obligations.

Philadelphia is not a party to any reciprocal tax agreement with any other municipality, and nonresidents of Pennsylvania cannot claim a credit against the earnings tax for income taxes paid to Delaware or any other state.

Worked Example: DE Resident Earning $75,000 in Philadelphia, PA

Single filer, all wages earned in Philadelphia in 2026. Delaware graduated brackets (unchanged from 2025) and the PA flat 3.07% rate, applied before personal credits and standard deduction. Philadelphia tax uses 3.43% for January to June and 3.425% from July 1, 2026.

Remote Work

What If I Work Remotely from Delaware for a Pennsylvania Employer?

A home office in Delaware changes less than many commuters expect. Pennsylvania follows the convenience-of-the-employer doctrine: pay for work a nonresident does outside Pennsylvania only for their own convenience cannot be allocated away from Pennsylvania. Delaware applies the same idea from its side and allows an allocation only for work outside the state that is necessary for the employer, not for the employee's convenience.

In practice, days you choose to work from your Delaware home still count as Pennsylvania wages and stay taxed at 3.07%. Days your employer requires you to work outside Pennsylvania are a different case: Pennsylvania allocates those wages by working days, reported on PA-40 with Schedule NRH.

If your job is in Philadelphia, only nonresident employees can get a wage tax refund for work done outside the city, and Philadelphia asks for signed documentation from your employer plus a worksheet with the dates you were required to work in and out of the city. Keep a daily log of where you worked.

Local Taxes

Do I Owe Pennsylvania Local Earned Income Tax Outside Philadelphia?

Pennsylvania municipalities outside Philadelphia may impose a local earned income tax on nonresidents who work within their borders. The nonresident EIT rate varies by municipality. An out-of-state resident still owes the work location's nonresident EIT rate and the Local Services Tax (LST), which is capped at $52 per year no matter how many municipalities you work in. Your PA employer withholds the local EIT based on the work location's rate schedule.

This local EIT is not creditable on your Delaware return. Delaware's Line 28 credit covers only state income taxes. The local EIT adds a separate cost with no offset from Delaware. Check the rate for your work municipality through the Pennsylvania Department of Community and Economic Development's PSD code lookup. For more on how PA local taxes work, see our Pennsylvania local earned income tax guide.

If you live in the City of Wilmington, remember the city's own tax: Delaware law lets Wilmington tax the earned income of its residents from whatever source, capped at 1.25%, so Pennsylvania wages count too. Delaware's Line 28 credit does not reduce it.

Mid-Year Move

What If I Moved Between Delaware and Pennsylvania During the Year?

If you changed your permanent residence between the two states during the year, mark part-year status on Pennsylvania's PA-40.

Delaware gives part-year residents a choice. You can file a resident return (PIT-RES) as if you had lived in Delaware all year, reporting all income and entering the dates of your Delaware residency, or a nonresident return (PIT-NON). Delaware suggests preparing both and filing the one that is more advantageous.

Document your exact move date. Lease or mortgage dates, utility activation records, and driver's license changes serve as evidence.

Withholding Errors

What If My Employer Withheld for the Wrong State?

If your Pennsylvania employer mistakenly withheld Delaware tax instead of Pennsylvania tax, you still owe Pennsylvania the correct amount when you file PA-40. Claim the incorrectly withheld Delaware amount as a payment on your PIT-RES, and Delaware will apply it to your liability or refund the overpayment.

If nothing was withheld at all, you owe Pennsylvania when you file and may face underpayment penalties. Set up estimated payments for future quarters using Pennsylvania Form PA-40 ES-I to avoid repeating the shortfall. Form REV-276 is the extension request, not the estimated payment voucher. Confirm that your employer's payroll system is set to withhold Pennsylvania income tax for your work location.