Virginia has reciprocity with several other states. This allows Virginia residents who have a limited presence in those states to be taxed only by Virginia. Likewise, residents of the other states who have a limited presence in Virginia are taxed only by their home states.
States that have reciprocity with Virginia are:
- District of Columbia
- West Virginia
If you meet the reciprocity criteria, you are exempt from filing requirements and income tax in the state of non-residence.
Who is exempt?
Virginia Residents who:
- Work in the District of Columbia, but do not establish residency in Washington, D.C are exempt from taxation there. These Virginia residents will pay income taxes to Virginia. This applies to individual income tax only, not to the District of Columbia Unincorporated Business Franchise Tax.
- Commute to Kentucky every day and receive only wage or salary income from Kentucky sources are exempt from taxation in that state.
- Work in Maryland, Pennsylvania, or West Virginia, are exempt from taxation in their respective state if:
- They are present in the other state for 183 days or less during the year, and
- Do not maintain an abode, such as a house or apartment, in their respective state and
- Receive only wage or salary income in the other state.
District of Columbia and Kentucky residents who:
- Are taxed in their home states, commute to Virginia every day, and receive only wage or salary income in Virginia are exempt from taxation in Virginia.
Maryland, Pennsylvania, or West Virginia Residents who:
- Are taxed in your home state, and
- Are present in Virginia for 183 days or less during the year, and
- Do not maintain an abode, such as a house or apartment, in Virginia, and
- Receive only wage or salary income in Virginia.
If you are exempt from Virginia income tax, complete the Form VA-4 and give it to your employer.
Resolving withholding errors
If you accept employment in a reciprocity state and meet the criteria for exemption, ask your employer to withhold Virginia tax. If your employer will not withhold Virginia tax, ask that no tax be withheld. You must then make estimated tax payments to Virginia.
If your employer withholds tax for the other state and you find out that you are exempt, correct your information with your employer for the future, and contact the other state to find out how to file for a refund.
If you are a resident of a reciprocity state, accept employment in Virginia, and meet the criteria for exemption, complete Form VA-4 to certify your exemption and give the form to your employer. You will need to re-certify your exemption every year.
If your employer withholds Virginia income tax and you find out that you are exempt, correct your withholding information with your employer for the future, and file Form 763-S to claim a refund.