Living in Indiana, working in Pennsylvania
Reciprocal agreement · tax year 2026
You pay Indiana
$2,036
on a seventy-thousand wage
Pennsylvania would want
$2,149
The agreement is worth
$114
a year
File this
REV-419
with your employer
What the agreement does for you
- Cross the line from Indiana into Pennsylvania for work and you keep money you would otherwise lose. The home charge on seventy thousand dollars is $2,036. Pennsylvania would have wanted $2,149 for the same wage. Because the two states have a deal, you pay home only, and $114 a year never leaves.
- Watch what happens as the salary grows. At forty-five thousand dollars Indiana takes $1,298. At a hundred thousand it takes $2,921, while Pennsylvania would have wanted $3,070. The distance between two states is rarely a fixed amount — it is a function of what you earn.
- The agreement only works if you claim it. As a Indiana resident, give your employer the exemption certificate for Pennsylvania, and expect to sign a fresh one most years. Without it on file, Pennsylvania takes tax from every paycheck. Then you must file there to get it back.
- Wages earned in Pennsylvania by a Indiana resident attract $2,036 rather than $2,149 at seventy thousand dollars, the agreement suppressing a differential of $114. ⚠️ That differential — not the work state's gross liability — is the correct statement of benefit, since the ordinary credit mechanism would have relieved the home charge rather than the foreign one.
- Scaling matters here: Indiana charges $1,298 on forty-five thousand dollars and $2,921 on one hundred thousand, where Pennsylvania would levy $3,070 on the latter. Because state schedules differ in both rate and structure, the interstate differential is a function of income rather than a constant, and comparisons drawn at a single salary generalize poorly.
- Reciprocity operates by employee election rather than automatically. The exemption certificate must be lodged with the employer and is generally renewable each year; absent it, Pennsylvania withholding continues and a nonresident return becomes necessary to recover it. ⚠️ Employers do not apply the agreement on the basis of a home address alone, so a commuter who never files the certificate obtains none of the benefit while remaining fully eligible for it.
What lands in your account
A $75,000 salary
Filing as
Paid
$2,285per paycheck
| Take-home, year | $59,410 |
|---|---|
| Tax, year | $15,591 |
| Share of pay taxed | 20.79% |
This is an average rate across all your pay — not the rate on your next dollar.
Indiana against Pennsylvania
A $75,000 salary
Compare with
−$3,636a year in Pennsylvania, once local prices are leveled
| Measure | Indiana | Pennsylvania |
|---|---|---|
| Take-home pay | $59,410 | $59,290 |
| Worth after local prices | $64,447 | $60,810 |
| Share of pay taxed | 20.79% | 20.95% |
| State sales tax | 7% | 6% |
| Groceries exempt here | Yes | Yes |
| Clothing exempt at $100 | No | Yes |
| Property tax rate | 0.74% | 1.3% |
| Price level | 92.2 | 97.5 |
| Housing prices | 71.4 | 85.8 |
| Fuel tax | 37¢ | 57.6¢ |
| Tobacco tax | $3.00 | $2.60 |
City income tax excluded. Sales-tax row: state-only. Exemptions: Indiana, Statewide average; Pennsylvania, Statewide average. Clothing: one $100 item; higher prices can change tax.
What you would need there
A $75,000 salary
Moving to
$80,270in Pennsylvania, for the same life
| To match take-home only | $75,178 |
|---|---|
| Raise you would need | +$5,270 |
| Prices in Pennsylvania | 98 vs 92 |
State taxes and state price levels only. No city tax, and no housing market.
What each state would charge, across the ladder
Reference wages for a single filer, not a claim about anyone's salary. The last column is the difference the agreement actually removes — which is the gap between the two states, not Pennsylvania's whole charge.
| Wage | Indiana charges | Pennsylvania would charge | Agreement is worth |
|---|---|---|---|
| $45,000 | $1,298 | $1,382 | $84 |
| $70,000 | $2,036 | $2,149 | $114 |
| $100,000 | $2,921 | $3,070 | $150 |
What this page cannot tell you
- This covers wages from a job. It does not cover self-employment, rent or investment income — those follow the ordinary rules for Pennsylvania.
- ⚠️ And it is a deal between two states. City and county taxes are not part of it, and several of these states have them.
- The comparison here assumes a single filer and treats both states as taxing the same income. Your own numbers will differ.
- Every agreement in this dataset applies to wages and salaries only. Business, rental, gain and investment income sourced to Pennsylvania remains taxable there under ordinary nonresident rules, and a commuter with such income may still owe a Pennsylvania return notwithstanding the agreement.
- ⚠️ Reciprocity binds the state layer only and commonly does NOT extend to municipal or county income taxes — Pennsylvania's local earned income tax is the standard example, remaining payable at the place of employment despite the state-level agreement. Local liabilities are excluded from every figure on this page.
- Figures are computed for a single filer at the stated wage, treating Indiana's and Pennsylvania's definitions of taxable income as equivalent and modeling the resident credit as limited to the home state's own liability. Real returns diverge on filing status, deductions each state allows separately, and credit limitation rules — so these are comparative magnitudes, not a computation of anyone's liability.