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Some states have reciprocity agreements. A reciprocity agreement between states means that the employee only pays taxes in one of the states — the state where the employee lives.
- For the employee's residence state, enter the appropriate filing status and allowances from the employee's W-4.
- For the work-location state, click the Filing status drop-down arrow, and select Do Not Withhold. (If you don't see the work-location state, don't worry. We'll make sure no taxes are withheld).
See which states have reciprocity agreements
|Business Location||Employee Residence State|
|Arizona||California, Indiana, Oregon, Virginia|
|Arkansas||Texarkana, Texas and Texarkana, Arkansas|
|Illinois||Iowa, Kentucky, Michigan, Wisconsin|
|Indiana||Kentucky, Michigan, Ohio, Pennsylvania, Wisconsin|
|Kentucky||Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, Wisconsin|
|Maryland||District of Columbia, Pennsylvania, Virginia, West Virginia|
|Michigan||Illinois, Indiana, Kentucky, Minnesota, Ohio, Wisconsin|
|Minnesota||Michigan, North Dakota|
|North Dakota||Minnesota, Montana|
|Ohio||Indiana, Kentucky, Michigan, Pennsylvania, West Virginia|
|Pennsylvania||Indiana, Ohio, Maryland, New Jersey, West Virginia|
|Virginia||District of Columbia, Kentucky, Maryland, Pennsylvania, West Virginia|
|West Virginia||Kentucky, Maryland, Ohio, Pennsylvania, Virginia|
|Wisconsin||Illinois, Indiana, Kentucky, Michigan|
If your employee does not give you a certificate of non-residence, the reciprocity agreement does not apply. That means your payroll taxes are calculated as though there were no reciprocity agreement between your work state and your employee's residence state.