Individual Income Tax
Reciprocal Income Tax Agreement/Virginia and Pennsylvania
Below is reproduced Virginia Tax Bulletin 83-2, concerning the reciprocal income tax agreement entered into between Virginia and Pennsylvania.
Under the terms of a "reciprocal'' agreement, effective for taxable years beginning on and after January 1, 1983, Virginia residents are not required to pay income tax or file a return with, nor be subject to withholding on compensation earned from sources in Pennsylvania.
Conversely, Pennsylvania residents earning wages in Virginia will be similarly exempted from income tax filing, payment, and withholding requirements imposed by this state. Nonresidents must file a certificate of nonresidence with their employer in order to relieve them of their tax liability to the state in which they are employed.
This agreement will eliminate the previous need to file two returns when a taxpayer resides in one state and works in the other. Now such individuals need only file a tax return with their state of residence.
This agreement was entered into by the State Tax Commissioner of the Commonwealth of Virginia and the Secretary of Revenue of the Commonwealth of Pennsylvania in accordance with § 58-151.063(B) of the
Code of Virginia
. This law permits the Department of Taxation to negotiate reciprocal agreements with other states that similarly exempt Virginia residents from taxation.
Under the terms of the agreement, Pennsylvania employers not otherwise required to withhold by law will be encouraged to withhold and remit Virginia tax from wages paid to Virginia residents. Virginia employers are likewise encouraged to withhold and remit Pennsylvania tax from wages paid to residents of that state.
This reciprocal agreement applies only to earned income. Furthermore, this agreement will not apply to individuals who reside in both states for a portion of the year. Such individuals will continue to be liable for tax to each state on income received while residing in the state.