Work in Pennsylvania, Live in Maryland: How Taxes Work

Reciprocity

Do Pennsylvania and Maryland Have a Tax Reciprocity Agreement?

Yes. Pennsylvania and Maryland have a written reciprocal income tax agreement. Under this agreement, wages, salary, and other compensation for personal services are taxed only by the employee's state of residence, not the state where the work is performed. A Maryland resident working in Pennsylvania does not owe Pennsylvania state income tax on those wages, and a Pennsylvania resident working in Maryland does not owe Maryland state income tax.

The agreement covers compensation for personal services: wages, salaries, tips, and commissions. It does not cover business income, rental income, partnership distributions, or other non-wage income sourced to the other state. If you earn non-wage income from PA sources, you may still need to file a Pennsylvania return for that income.

One important exception: the reciprocity exemption does not apply if you maintain a place of abode in Pennsylvania for more than six months during the tax year and are physically present in PA for 183 days or more. In that situation, Pennsylvania may consider you a statutory resident. The six-month and 183-day thresholds must both be met for the exception to apply.

Filing Obligations

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

File your Maryland resident return (Form 502) reporting all income from every source, including wages earned in Pennsylvania. You do not need to file a Pennsylvania state return (PA-40) for wage income, because reciprocity exempts those wages from PA state tax.

If you paid any Pennsylvania local earned income tax, file Maryland Form 502CR along with your Form 502 to claim a credit for those local taxes. Attach documentation of the PA local tax paid to support the credit claim. Complete a separate 502CR Part A for each PA locality to which you paid tax.

Your Maryland return is due by April 15. Maryland Form 502 includes both state and county income tax in a single filing. File Maryland Form PV if you need to make a balance-due payment with your return.

Employer Withholding

How Should My PA Employer Handle Withholding?

Give your Pennsylvania employer a completed Form REV-419 (Employee's Nonwithholding Application Certificate). On Section II, check box (b) and select Maryland as your state of residence. This tells your employer to stop withholding Pennsylvania state income tax and instead withhold Maryland income tax from your wages.

Once your employer processes the REV-419, your paycheck should reflect Maryland state and county withholding rather than Pennsylvania state withholding. If your employer's payroll system cannot handle Maryland withholding, you will need to make quarterly estimated payments to Maryland using Form PV. Estimated payments are due April 15, June 15, September 15, and January 15 of the following year.

File the REV-419 as soon as you start the job. If you delay, PA state tax may be withheld from your early paychecks. You can recover PA state tax withheld in error by filing a PA-40 nonresident return and requesting a refund, but this adds paperwork you can avoid by filing the REV-419 promptly.

PA Local Taxes

Do I Still Owe Pennsylvania Local Earned Income Tax?

Possibly. The reciprocity agreement covers only state income tax. Pennsylvania municipalities impose their own local earned income tax (EIT) under Act 32, and this local tax can apply to nonresidents who work within the municipality's borders. The nonresident EIT rate is set by the municipality where you work: in Pennsylvania's official EIT register most municipalities charge nonresidents 1%, about a quarter charge them 0% and some 0.5%.

Philadelphia is a notable exception. The city imposes a wage tax on all workers within city limits, including nonresidents, at a rate higher than most other PA localities. Check the Philadelphia Department of Revenue for the current nonresident wage tax rate if you work in Philadelphia.

If your PA employer withholds local EIT from your wages, claim a credit on Maryland Form 502CR for those local taxes paid. The credit prevents double taxation at the local level. Attach documentation of the PA local tax paid when filing the 502CR with your Maryland Form 502.

Not all PA municipalities impose EIT on nonresidents. Some smaller municipalities do not levy an earned income tax at all. Check with your employer or the municipality where you work to confirm whether a nonresident EIT applies.

MD County Tax

Which Maryland County Income Tax Do I Pay?

You pay the county income tax for the Maryland county (or Baltimore City) where you live, not where you work. Every Maryland county and Baltimore City levies its own local income tax. Rates range from 2.25% to 3.30% depending on your county of residence. Most Maryland counties charge 3.20%.

The county tax is calculated on your Maryland taxable income and filed as part of your Form 502. If your PA employer handles Maryland withholding after receiving REV-419, verify that the correct county rate is being applied. The county rate should match the county listed on your Maryland Form MW507, which you may need to provide to your PA employer along with the REV-419.

If you move between Maryland counties during the year, the county tax rate for the entire year is based on where you live on December 31. Visit the Maryland Comptroller's website for a complete list of current county and Baltimore City tax rates.

Worked Example: MD Resident Earning $75,000 in PA

Single filer, all wages from PA employer, Montgomery County MD, using 2025 rate brackets

Withholding Errors

What If My PA Employer Withholds Pennsylvania Tax by Mistake?

If your employer withheld Pennsylvania state income tax despite the reciprocity agreement, take two steps. First, file a corrected REV-419 with your employer immediately to stop PA withholding going forward and redirect withholding to Maryland. Second, to recover the PA state tax already withheld, file Pennsylvania Form PA-40 as a nonresident and request a refund of the withheld amount.

On the PA-40, report your wage income and claim the reciprocity exemption. Pennsylvania should refund the state tax that was withheld in error. Continue filing your Maryland Form 502 as usual, reporting all income and paying Maryland state and county tax. Do not wait for the PA refund before filing your Maryland return. If Maryland tax was underwithheld because PA tax was being taken instead, you may owe Maryland a balance when you file.

Remote Work

What If I Work Remotely from Maryland for a PA Employer?

Under the reciprocity agreement, your wages are taxed by Maryland regardless of where you physically perform the work. If you work from home in Maryland for your PA employer, your income remains subject to Maryland tax only. Pennsylvania has no claim to tax those wages whether you commute to a PA office or work entirely from your Maryland home.

The practical effect is straightforward: your tax situation is the same whether you commute to Pennsylvania or telecommute from Maryland. File your Maryland Form 502, pay Maryland state and county tax, and maintain your REV-419 exemption with your employer. If your employer has questions about withholding for remote workers, the REV-419 and the reciprocal agreement cover the exemption regardless of work location.

Pennsylvania local EIT on remote workdays depends on the specific municipality's ordinance. Some localities tax only days physically worked within their borders. If you never set foot in the PA municipality, you may not owe its local EIT. Check with the locality for its rules on remote workers.

Mid-Year Move

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

If you moved from Pennsylvania to Maryland (or vice versa) during the year, file as a part-year resident in each state. In Maryland, use Form 502 and indicate the period of Maryland residency. In Pennsylvania, file Form PA-40 as a part-year resident for the period you lived in PA.

During the months you lived in Maryland, the reciprocity agreement applies to your PA wages: no PA state tax is owed, and you file only with Maryland for that income. During the months you lived in Pennsylvania, PA taxes you as a resident on all income. Maryland does not tax you as a nonresident on PA-source wages during the period you lived in Pennsylvania, because Maryland has no claim to tax a nonresident's PA-source wages.

Keep your exact move date documented. Lease agreements, utility records, and driver's license changes serve as evidence of when your residency changed. Both states require you to prorate your income between the two residency periods based on the date of the move.