What actually happens
An employee who lives in Maryland and performs work in West Virginia sits in two tax systems at once. The residence state claims the right to tax all of a resident's income wherever earned; the work state claims the right to tax income sourced within its borders. West Virginia and Maryland resolved that overlap by agreement: the work state gives up its claim on commuters' wages entirely.
The certificate is not optional
Reciprocity does not apply automatically because the employee's address is in Maryland. It applies when the employee gives you a signed WV/IT-104 (West Virginia Employee's Withholding Exemption Certificate (reciprocal-state exemption section)). Until that form is in your hands you are required to withhold West Virginia tax, and an auditor will ask to see it. The form stays in your records; it is not filed with the state.
Download WV/IT-104 from West Virginia
Unemployment insurance goes to one state only
Income tax can be split between states. Unemployment insurance cannot. Under the localization test used by every state, an employee whose services are performed entirely in West Virginia is covered by West Virginia for unemployment purposes, and all wages are reported there — regardless of where they live, where you are headquartered, or which state's income tax you withhold. West Virginia's 2026 taxable wage base is $9,500. The four-factor test in order.
Local taxes are a separate problem
West Virginia: Several West Virginia municipalities (e.g., Charleston, Huntington, Parkersburg, Weirton) impose a flat per-week City Service Fee (roughly $2-$5 per week) on people who work in the city, withheld by employers. It is a flat head-fee, not a percentage-of-income tax, and is not covered by state reciprocity.
Maryland: 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.
What you have to register for
| Obligation | State | Agency |
|---|---|---|
| Income tax withholding | Maryland | Comptroller of Maryland |
| Unemployment insurance | West Virginia | WorkForce West Virginia |
Frequently asked
Do West Virginia and Maryland have a reciprocal tax agreement?
Yes. West Virginia exempts Maryland residents from West Virginia income tax withholding on wages, provided the employee files WV/IT-104 with their employer. Without that form on file the employer must still withhold West Virginia tax.
Which state's income tax should be withheld?
Maryland. Under the agreement the wages are taxable only by the state of residence, so you withhold Maryland tax and stop withholding West Virginia tax once the certificate is filed.
Which state gets the unemployment insurance wages?
West Virginia. Unemployment coverage is never split between states for a single job. The localization test assigns the whole job to the state where services are performed, which here is West Virginia, regardless of residence or where the employer is headquartered.