Determination engine

Which state do you actually withhold in?

Reciprocity, convenience-of-the-employer, nonresident thresholds and unemployment localization, applied together to one employee's facts. Every answer cites the state source it came from.

Withhold Pennsylvania income tax.

Maryland and Pennsylvania have a reciprocal agreement, so the work state stands down once the exemption certificate is on file.

Income tax withheld to

Pennsylvania

Flat 3.07%

Employee certificate

MW507

Employee's Maryland Withholding Exemption Certificate (exemption claimed on the reciprocal-state line)

Unemployment insurance

Maryland

Localized under factor 1: Localization.

Reciprocal agreement

Yes

Maryland exempts Pennsylvania residents.

→

File MW507 with the employer

Reciprocity is not automatic. Until the employee files MW507 (Employee's Maryland Withholding Exemption Certificate (exemption claimed on the reciprocal-state line)) you are legally required to withhold Maryland tax. Keep the signed form on file; it is not sent to the state.

✓

Withhold Pennsylvania income tax instead

Under the agreement the employee is taxed only by their state of residence. You will need a Pennsylvania withholding account.

Reciprocity does not cover Maryland local taxes

EVERY Maryland county and Baltimore City imposes a local income tax, collected together with the state tax through payroll withholding at combined state+local rates. Nonresidents working in Maryland who are not covered by reciprocity pay a special nonresident rate (state rate plus a statutory nonresident surcharge) in lieu of a county rate.

Pennsylvania has local income taxes at the residence

Roughly 2,470 municipalities and 469 school districts levy an Earned Income Tax (EIT) and/or a Local Services Tax (LST), withheld by employers under Act 32. Philadelphia's Wage Tax is separate from the Act 32 system. CRITICAL: the PA/NJ reciprocal agreement does NOT cover the Philadelphia Wage Tax -- New Jersey residents working in Philadelphia still owe it.

→

Employer registrations you will need

Pennsylvania — Income tax withholding: Pennsylvania Department of Revenue
Maryland — Unemployment insurance: Maryland Department of Labor, Division of Unemployment Insurance

→

Get the form

MW507 — Maryland (official state source)

Maryland profile Pennsylvania profile Full write-up for this pair

Change the inputs

Withholding determination

Answer six questions. The result is a shareable link, so you can paste it into a ticket or an email.

Employee lives inState of residence

Work is performed inWhere the employee physically sits

Employer is based inWhere the work is directed from

Days in the work stateThis calendar year, leave blank if unknown

Wages from work-state daysUS dollars, leave blank if unknown

Arrangement Works remotely rather than at an employer location Remote work is an employer necessity, not employee preference

Run a whole roster instead

This is a determination aid, not advice. StateSide encodes published state rules and applies them mechanically to the facts you enter. It does not know your entity structure, your nexus history, your equity compensation, or the dozens of exceptions that turn a clean rule into a judgement call. Every determination cites the state source it came from — verify against that source, and take anything consequential to a payroll tax professional before you act on it.