Learn Everything About the Reciprocal Agreement

Standardized Legal Documents Learn Everything About the Reciprocal Agreement

Get the Scoop on the Reciprocal Agreement

Are you looking for information on the reciprocal agreement and want to know more about it, what it includes, and how it works? You came to the right place! We will explain everything about the reciprocal agreement and show you how you can create various contracts with DoNotPay in a snap! We offer you assistance with the LLC operating agreement, bill of sale document, prenuptial agreement, and many more!

The Reciprocal Agreement—Explained

Why waste money on paying excessive income taxes when you can use the reciprocal agreement to lower the amount? The agreement helps by reducing the taxes you have to pay annually. 

It is especially beneficial for the people who work in one state but live in another. It makes sense to use it if the state you reside in has lower taxes than the one you work in. Reciprocity needs to exist in both states for the agreement to work. 


Employees have to fill out and deliver a non-residency certificate to have one of the taxes withheld. They also have to request that the taxes of their home, not work, state be withheld. 

The crucial part of reciprocity is setting up the tax withholding, which is what your employer should do. It’s easy for them to make a mistake and get your state wrong. In such cases, issues arise. 

If you, as an employee, specifically asked for the tax exemption in one state but your employer withheld tax for the other one, the situation would most likely result in a state tax penalty. You need to be clear and provide your company with accurate info, and the employer has to make sure not to make a mistake when setting the tax withholding up.

Why Is the Reciprocal Agreement Important?

Working for a living and trying to make ends meet is difficult enough without having the extra burden of spending your hard-earned money on paying extra taxes. The reciprocal agreement is important because it helps take some burden off employees’ backs by lowering the amount of taxes, making it easier to navigate their day-to-day life.

Many states have reciprocity, which has proven super helpful for the employees. Reciprocal agreements apply to everything you earn through employment, including:

  • Bonuses
  • Tips
  • Commissions

The only downside is that the reciprocal agreement doesn’t affect federal payroll taxes. No matter where you live or work, you will have to continue paying the federal taxes.

States With Reciprocity Agreements

Not every state supports reciprocity. If you are curious about what states do, we provide you with all you need to know:

Resident State Work State
States outside of the District of Columbia District of Columbia
California, Indiana, Oregon, Virginia Arizona
Iowa, Kentucky, Michigan, Wisconsin Illinois
Kentucky, Michigan, Ohio, Pennsylvania, Wisconsin Indiana
Illinois Iowa
Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, Wisconsin Kentucky
District of Columbia, Pennsylvania, Virginia, West Virginia Maryland
Illinois, Indiana, Kentucky, Minnesota, Ohio, Wisconsin Michigan
Michigan, North Dakota Minnesota
North Dakota Montana
Pennsylvania New Jersey
Minnesota, Montana North Dakota
Indiana, Kentucky, Michigan, Pennsylvania, West Virginia Ohio
Indiana, Maryland, New Jersey, Ohio, Virginia, West Virginia Pennsylvania
District of Columbia, Kentucky, Maryland, Pennsylvania, West Virginia Virginia
Kentucky, Maryland, Ohio, Pennsylvania, Virginia West Virginia
Illinois, Indiana, Kentucky, Michigan Wisconsin

Having Trouble Drafting Your Legal Documents? DoNotPay Saves the Day!

Composing legal documents and agreements is a complicated and tiresome procedure. Often, people don’t know where to begin. One of the solutions to this issue would be to pay a legal advisor to have a look and help out, but that would only waste your time and money. DoNotPay creates your legal docs in minutes, and you don’t need any previous legal knowledge to do it!

All you need to do is complete the following instructions, and your contract will be drafted and ready with no hassle!

  1. Open your web browser and visit DoNotPay
  2. Give us the name of the document or agreement you want to create
  3. Provide additional info, such as the names and addresses of the parties to the agreement

Depending on the document you want, the parties involved will be required to either sign or notarize it.

DoNotPay can draft contracts and legal documents on your behalf! All you need to do is provide us with info on the agreement you want us to draft, and we do it so that you don’t have to struggle! These are some of the agreement that we draw up for you:

DoNotPay Helps You With Other Contracts As Well

Were you unable to find the contract you were looking for in the list above? Don’t worry! We offer you further assistance with more agreements and provide you with plenty of contract templates! If you need help with any of the ones we listed below, count on DoNotPay to provide you with the easiest and fastest instructions:

  1. Verbal Agreement
  2. Trust Agreement
  3. Proffer Agreement
  4. Profit-Sharing Agreement
  5. Buyer-Broker Agreement
  6. Buyer Agency Agreement
  7. Truck Leasing Agreement
  8. Lease Extension Agreement
  9. Buyer Representation Agreement

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