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Reciprocal agreements

Reciprocal agreements between states allow employees that work in one state but live in another to only pay income taxes to their state of residency. If reciprocity exists between the two states, employees will need to complete and deliver a non-residency certificate to you in order to have residency state tax withheld instead of the work state tax.

If you'd like to set up reciprocity for your employees with Gusto, see this article.

Note: While reciprocity is determined by an employee's home address and pertains to their income tax withheld, unemployment liability is typically determined by an employee's work address.  Before registering for unemployment tax in a new state, please reach out to an accountant or the applicable state agency for determination of liability.

States with Reciprocal Agreements

Resident StateWork StateNon-resident Certificate 
States outside of District of ColumbiaDistrict of Columbia D-4A
California, Indiana, Oregon, VirginiaArizonaWEC
Iowa, Kentucky, Michigan, WisconsinIllinoisIL-W-5-NR 
Kentucky, Michigan, Ohio, Pennsylvania, Wisconsin Indiana WH-47 
Illinois Iowa 44-016 
Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, WisconsinKentucky 42A809 
District of Columbia, Pennsylvania, Virginia, West Virginia Maryland MW 507 
Illinois, Indiana, Kentucky, Minnesota, Ohio, Wisconsin Michigan MI-W4 
Michigan, North Dakota Minnesota MWR 
North DakotaMontana MT-R 
Pennsylvania New Jersey NJ-165 
Minnesota, Montana North Dakota NDW-R 
Indiana, Kentucky, Michigan, Pennsylvania, West Virginia Ohio IT-4NR 
Indiana, Maryland, New Jersey, Ohio, Virginia, West Virginia Pennsylvania REV-419
District of Columbia, Kentucky, Maryland, Pennsylvania, West Virginia Virginia VA-4 
Kentucky, Maryland, Ohio, Pennsylvania, Virginia West Virginia WV/IT-104 R 
Illinois, Indiana, Kentucky, Michigan Wisconsin W-220  

Note: NY and NJ do not have reciprocity. If you work in NY and live in NJ, you will need to pay NY income taxes as a non-resident and pay NJ income taxes as a resident. However, NJ residents can take a tax credit for taxes that have been paid to other jurisdictions.