Reciprocity Definition

Reciprocity between states means that an employee who works in State A but lives in State B would be required to pay state income tax to State B (residence) only.

Reciprocity Extended Definition
When states have reciprocal agreements, each state has its own rules and paperwork governing reciprocity.

In general, an employee will complete an exemption form from their state of employment, verifying that they lives in a different state.

For example, an employee might work in Ohio but reside in Kentucky. Since Ohio and Kentucky have a reciprocal agreement, the employee would submit Ohio’s exemption form. That employee would pay Kentucky state income tax instead of Ohio state income tax. Online information and forms can usually be found on the state’s revenue website.

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Last Updated By

Rachel Blakely-Gray | Apr 28, 2023