Work in Virginia, Live in Maryland: How Taxes Work

The form

How do I file VA-4 with my Virginia employer?

VA-4 is Virginia's Employee's Withholding Certificate. Maryland residents use it to claim exemption from Virginia withholding under reciprocity:

1. Download VA-4 from the Virginia Department of Taxation or get it from your employer.
2. Check the exemption box indicating you are a resident of a reciprocal state (Maryland).
3. Submit to your employer's payroll department. They stop VA withholding.
4. Provide your Maryland county information so the employer can withhold the correct MD state plus county tax rate.
5. Verify your pay stub reflects MD withholding (state + local) and zero VA withholding.

If your Virginia employer is small and does not have the infrastructure to withhold Maryland taxes, you will need to make quarterly estimated payments to Maryland yourself using Form PV. File VA-4 to stop VA withholding either way.

Why do Maryland residents often pay more than Virginia residents on the same salary?

Maryland's income tax has two layers: the state tax (graduated brackets) and the county piggyback tax (a flat percentage that varies by county). Virginia has only a state income tax with no local income tax layer. When you add Maryland's county rate on top of the state rate, the combined MD effective rate often exceeds Virginia's state-only rate, especially in higher-tax counties.

Under reciprocity, you pay Maryland's combined rate regardless of working in Virginia. This means some MD residents working in VA pay more in state/local income tax than their Virginia-resident coworkers earning the same salary. The trade-off is filing simplicity and the fact that Maryland residency offers other benefits (schools, services) funded by that tax.

What if Virginia tax was withheld before I filed VA-4?

If your employer withheld Virginia tax before you claimed the reciprocity exemption:

1. File VA-4 immediately to stop further VA withholding.
2. At year-end, file Virginia Form 763 (Nonresident Individual Income Tax Return) showing zero Virginia-taxable wages. Claim a refund of the VA withholding.
3. File Maryland Form 502 as normal. Pay any MD tax balance that was under-withheld during the VA withholding period.

Does VA-MD reciprocity cover self-employment or business income?

No. The reciprocity agreement covers only employee wages, salaries, tips and commissions — compensation reported on a W-2. If you earn self-employment income, partnership income, rental income or other business income from Virginia sources, reciprocity does not exempt that income from Virginia tax. You may need to file a Virginia nonresident return (Form 763) for that non-wage VA-source income, even though your wages are fully exempt.

This is a common oversight for Maryland residents who have a side business or consulting arrangement in Virginia in addition to their regular W-2 job.

What about military and federal employees in the DC metro area?

The DC-MD-VA corridor has an unusually high concentration of military and federal workers. Special rules apply:

• Military members: Under the Servicemembers Civil Relief Act (SCRA), military members pay income tax only to their state of legal residence, regardless of where they are stationed. If your legal residence is Maryland and you are stationed in Virginia, you pay Maryland tax. The SCRA overrides normal state tax rules and provides even broader protection than reciprocity.
• Federal civilian employees: Normal reciprocity rules apply. A Maryland resident working at a federal agency in Virginia files VA-4 and pays Maryland tax. A Maryland resident at a federal agency in DC files D-4A and pays Maryland tax. The federal employer follows state withholding rules just like a private-sector employer.
• Military spouses: Under the Military Spouses Residency Relief Act, a military spouse can elect to use the servicemember's state of legal residence for income tax purposes. If the servicemember's legal residence is a no-income-tax state, this can eliminate state tax entirely.

What if I moved from Virginia to Maryland mid-year?

If you changed your domicile during the tax year, you file as a part-year resident in both states. For the months you lived in Virginia, you file VA Form 760PY as a part-year resident. For the months you live in Maryland, you file MD Form 502 as a part-year resident. Each state taxes only the income earned during your residency period. Notify your employer to update withholding when you move — they need to switch from VA to MD withholding (or vice versa) at the time of the move.

How does this compare to the reverse direction — VA residents working in MD?

The reverse direction is generally more favorable financially for Virginia residents. VA residents working in MD pay Virginia's state-only rate, which is usually lower than Maryland's combined state-plus-county rate. MD residents working in VA pay the higher Maryland combined rate. Both directions benefit from reciprocity's filing simplicity, but the tax dollar amount differs.

What about working in DC — does that change anything?

If your workplace is in DC rather than Virginia, the picture is even simpler: DC does not tax nonresidents at all. As a Maryland resident working in DC, you owe only Maryland income tax. There is no DC return to file and no DC withholding. See work in DC, live in Maryland for full details.

For remote workers: if you work from your Maryland home for a Virginia employer, reciprocity still applies. You owe only Maryland tax on your wages. File VA-4 as you would for on-site work. See our remote work two-state tax guide for broader scenarios.