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Reciprocity Agreements by State

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Payroll taxes are undoubtedly confusing! When it comes to state income tax, each state determines which wages are subject to the tax.  Some states require that all income paid to a state resident is subject to that state’s income tax (even if the work is performed in another state) while other states require that wages paid for work performed within that state is subject to that states income tax.

To help simplify income tax, some states have created reciprocity agreements with neighboring states.  States with a reciprocity agreement allow the employee to pay income tax only to the state that they live in, instead of the state that they work in.  For example, an Arizona resident working in California would not have to pay California income tax because the two states have a reciprocity agreement.

As the number of remote workers continues to rise, employers should pay careful attention to how they tax employees.

Below is a list of states that have reciprocity agreements with other states.

StateReciprocity States
ArizonaCalifornia, Indiana, Oregon and Virginia
IllinoisIowa, Kentucky, Michigan and Wisconsin
IndianaKentucky, Michigan, Ohio, Pennsylvania and Wisconsin
IowaIllinois
KentuckyIllinois, Indiana, Michigan, Ohio, Virginia, West Virginia and Wisconsin
MarylandPennsylvania, Virginia, Washington, D.C. and West Virginia
MichiganIllinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin
MinnesotaMichigan and North Dakota
MontanaNorth Dakota
North DakotaMinnesota and Montana
OhioIndiana, Kentucky, Michigan, Pennsylvania and West Virginia
PennsylvaniaIndiana, Maryland, New Jersey, Ohio, Virginia and West Virginia
VirginiaKentucky, Maryland, Pennsylvania, Washington, D.C. and West Virginia
Washington, D.C.Maryland and Virginia
West VirginiaKentucky, Maryland, Ohio, Pennsylvania and Virginia
WisconsinIllinois, Indiana, Kentucky and Michigan
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What Our Satisfied Clients are Saying

Valor Payroll Solutions has, quite literally, changed my life. I’m the CEO of a small, but fast growing, company, and I had previously been taking care of our multi-state payroll myself. It was overwhelming and I did not have the necessary expertise. Christina from Valor stepped in and took our payroll over completely, including all of the multi-state tax filings and other reporting. She also fixed all of the mistakes I didn’t even know I had made. She is kind, gracious, knowledgeable, attentive, and communicative. She has improved my company and has allowed us to continue growing. I would recommend Valor to any company with payroll needs. You will kick yourself for not doing it sooner.
Tamara DeHayClover Educational Consulting Group
Christina with Valor Payroll Solutions has been nothing short of amazing for our small business. She is kind, she is patient, she is prompt, and she has helped us learn so much that our previous payroll company was letting slide through the cracks. We are so grateful to have found her.
Sara SeemayerBraille Abilities
Christina was extremely helpfully and very patient. Christina delivered good work on this project. I enjoyed working with her, Her communication was top-notch, she met all deadlines, and her skills were reasonably strong. She helped me find additional information. I enjoyed working with Christina and will definitely be working with her in the future. Thank you Christina.
Kay ShawAnti-bully Crusaders
If I could give a 10 star I WOULD!! Usually I don’t take time to actually write reviews unless the experience was top notch. Christina is by far the MOST patience and professional individual, I’ve had the pleasure of working with. She answered all of my seriously silly questions without belittling me. She responds very fast, with great detail and clarity. I’ll def be using her again. Thank me later!
Brittney MichelleThe Amazing Paint Party
Christina was very knowledgeable in all the HR and hiring rules. She really helped me set up the hiring system for my startup. She called CA FTB to confirm the details and went over and above to do her job perfectly. It was awesome working with her and I am glad I hired her.
Sunny SethiHen Nozzles
Christina is a great professional, works fast, pays attention to details, and is very thorough. Hope to work with her on more extensive tasks!
Gabriela OnofreiOSF Global Services
Christina did an excellent job on my project. Fast, professional and her work was superb!
Mike FelittoEverclean Building Services, LLC
Christina Hageny did some early work for our company and we were so impressed with her level of knowledge, expertise and commitment to the project that we signed her on to manage our company’s payroll full time. We deal in all 50 states and have employees spread out all over the country. As you can imagine, we brought a pretty complex set-up to the relationship, but Christina tackled it without any issue and got us back into compliance while ensuring that our team got compensated correctly and on time along the way. We do and will continue to recommend Christina Hageny and Valor Payroll Solutions to our friends and colleagues. Capable, trustworthy and unparalleled customer service!
Tony GomezZipDeal LLC
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