reciprocity
A deal between two states so you only pay tax where you live.
An agreement assigning taxing rights over wage income to the state of residence.
What that means in practice
If you live in one state and work in another, both can have a claim on your wages. Some pairs of states have agreed not to do that. You hand your employer one form and the state you work in stops taking anything.
Reciprocal agreements relieve nonresident filing and permit withholding exemption in the work state. ⚠️ The benefit is the differential between the two states' liabilities, not the work state's gross charge — absent an agreement the resident state credits tax paid elsewhere, so the counterfactual total is approximately the greater of the two. Agreements cover wages only.
Questions people ask
Is this a rule, or just a way of describing something?
It describes how something works. It does not set a number. reciprocity is an idea you need in order to read the rules. It is not a rule with a rate of its own. That is why it turns up in federal, state and local tax alike.
Is this one of those terms that needs three other terms to explain it?
Less than most. reciprocity stands on its own. Start here rather than coming back to it later.
Is this the standard name for it?
This one has a single accepted name. That makes it easier to look up than much of the vocabulary around it.
Is this a statutory term or an analytical one?
This is an analytical or procedural concept rather than a rate-bearing statutory provision. It applies across levels of government and tax types, and is used to interpret provisions that do carry rates rather than imposing liability itself.
Does this term resolve independently?
This term resolves largely independently of other defined terms, with limited cross-references. It is therefore usable as an entry point; more heavily cross-referenced provisions generally require it rather than the reverse.
Is this designation the settled one?
This designation is the settled term of art with limited alternative usage, so it maps reliably to statutory and agency references. Terms with multiple colloquial designations require more care when searching source material.