DC and Maryland have a tax reciprocity agreement, so if you live in one jurisdiction and work in the other, you owe income tax only to the place where you live. A Maryland resident working in DC pays Maryland income tax on those wages and no DC income tax. A DC resident working in Maryland pays DC income tax and no Maryland state income tax. The agreement covers wages, salaries, and other compensation for personal services, and it works only if you give your employer the right nonresidence certificate so they stop withholding for the wrong jurisdiction.
How the Agreement Works
Under D.C. Code § 47-1805.02, Maryland residents who earn wages or salary in the District are generally exempt from DC income tax on that income.1D.C. Law Library. District of Columbia Code 47-1805.02 Maryland mirrors that treatment through Administrative Release No. 3 from the Comptroller’s Office: DC residents earning wages in Maryland are exempt from Maryland state income tax on that compensation.2Maryland Comptroller. Maryland Income Tax Administrative Release No. 3 Your employer withholds only for your home jurisdiction, and you file only a resident return.
Without the agreement, a Maryland commuter would technically owe DC tax on wages earned there and then claim a credit on their Maryland return to avoid double taxation. Reciprocity removes that whole procedure. DC’s income tax rates run from 4% on the first $10,000 of taxable income up to 10.75% on income above $1 million, so the paperwork this eliminates is not trivial.3Office of Tax and Revenue. DC Individual and Fiduciary Income Tax Rates
Maryland Residents Working in DC: File Form D-4A
If you live in Maryland and work for a DC employer, submit Form D-4A (Certificate of Nonresidence in the District of Columbia) to your employer. This tells the payroll department to stop withholding DC income tax from your paychecks.4DC Office of Tax and Revenue. Form D-4A Certificate of Nonresidence in the District of Columbia The form goes to your employer, not to DC’s Office of Tax and Revenue. Your employer keeps it on file as documentation for why no DC tax is being remitted on your wages.
The form is short. You provide your name, Social Security number, permanent address outside the District, and the tax year, and you certify that you will not be residing in DC for 183 days or more during that year.4DC Office of Tax and Revenue. Form D-4A Certificate of Nonresidence in the District of Columbia Because the certification is year-specific, check with your employer that the form on file is current.
File it early. Start a new job without submitting a D-4A and your employer will default to withholding DC tax. Recovering those dollars means requesting a refund after the tax year closes, which is slower and more work than doing the paperwork up front.
DC Residents Working in Maryland: Use Form MW507
The exemption runs both ways. If you live in DC and work in Maryland, your Maryland employer should not withhold Maryland state income tax from your wages. To claim the exemption, complete Line 4 of Maryland Form MW507 (Employee’s Maryland Withholding Exemption Certificate), check the box for District of Columbia residents, and certify that you do not maintain a place of abode in Maryland.5Maryland Comptroller. Form MW507 Employees Maryland Withholding Exemption Certificate
If wages are your only Maryland-source income and your employer properly stops withholding Maryland tax, you generally do not need to file a Maryland nonresident return at all. If you have other Maryland-source income, such as rental property, business income, or gambling winnings from Maryland sources, file Form 505.6Maryland Comptroller. Maryland Nonresident Tax Forms and Instructions
The 183-Day Trap
Both jurisdictions use 183 days as a threshold that can override the agreement. The D-4A expressly requires you to certify that you will not reside in DC for 183 days or more during the tax year.4DC Office of Tax and Revenue. Form D-4A Certificate of Nonresidence in the District of Columbia On Maryland’s side, the reciprocal agreement does not apply to individuals who maintain a place of abode in Maryland for more than six months and are physically present there for 183 days or more; they are treated as statutory residents and must file a Maryland resident return reporting all income.2Maryland Comptroller. Maryland Income Tax Administrative Release No. 3
This is the gap between legal domicile and daily reality. You may consider yourself a DC resident, but if you are sleeping in a Maryland apartment most nights, Maryland can claim you as a statutory resident. The same works in reverse. Count your days honestly.
Maryland County Tax Still Applies
Reciprocity covers state-level income tax only. Maryland’s county “piggyback” tax is a separate obligation that you owe based on where you live, not where you work. Every Maryland county and Baltimore City imposes a local income tax on top of the state rate, and for 2026 those rates range from 2.25% in Worcester County to 3.30% in Dorchester and Kent Counties.7Maryland General Assembly. Payments to Civil Divisions of the State – Fiscal 2027 Most counties in the DC commuter belt, including Montgomery, Prince George’s, and Howard, sit at 3.20%. Reciprocity does not reduce these amounts, so a Maryland resident working in DC should still budget for the county rate on top of the state rate.
Recovering Tax That Was Withheld by Mistake
If your DC employer withheld District income tax from your wages when they should not have, file Form D-40B (Nonresident Request for Refund) with the DC Office of Tax and Revenue after the close of the calendar year.8DC Office of Tax and Revenue. DC Nonresident Request for Refund or Ruling D-40B You need a separate D-40B for each tax year you are claiming.
Do not wait. Under D.C. Code § 47-4304(a), you have three years from the due date of the return or three years from the date the tax was paid, whichever is later.9Government of the District of Columbia Office of Tax and Revenue. OTR Revenue Ruling 2008-01 Refunds-Statute of Limitations After that window closes, the money is gone. If you are a DC resident whose Maryland employer withheld Maryland tax by mistake, the same principle applies in reverse: file a Maryland return to claim the refund.
Moving Between DC and Maryland Mid-Year
Reciprocity is clean when you live in one jurisdiction all year. Move across the border mid-year and the filing gets more complicated. DC requires part-year residents to file Form D-40, prorating the standard deduction and applicable credits for the portion of the year they lived in the District.10Office of Tax and Revenue. Individual Income Tax Filing Expect to file in both jurisdictions for the year of the move, with the reciprocity exemption applying only during the months you were actually a nonresident of the taxing jurisdiction.
Tell your employer promptly when you move so withholding can be adjusted. If you previously filed a D-4A claiming nonresidence in DC and then move into the District, file Form D-4 right away so DC withholding begins.
Telework and Hybrid Schedules
The agreement was designed for physical commuters. If you are a Maryland resident who teleworks from home in Maryland for a DC-based employer, the work is being performed in Maryland, so Maryland taxes the income under its normal rules and your employer should be withholding Maryland tax. If you never set foot in a DC office, there is no DC-source income to exempt and a D-4A is not needed.
Hybrid schedules are messier. If you split time between a DC office and a Maryland home, your income could in theory be sourced to both jurisdictions based on where the work is actually performed. In practice, most employers treat hybrid workers under the reciprocity framework as long as the worker is a DC nonresident, but current D-4A paperwork on file is what keeps that treatment clean.
What Reciprocity Does Not Cover
The agreement protects wages, salaries, and personal service compensation. It does not shield income from an unincorporated business operating in DC. If you are a Maryland resident running a business in the District, you are subject to the DC Unincorporated Business Franchise Tax at 8.25% of taxable income, with a minimum tax of $250 if your DC gross receipts are $1 million or less and $1,000 if they exceed that threshold.11Office of Tax and Revenue. DC Business Franchise Tax Rates The tax follows the business location, not the owner’s home, so reciprocity does not apply.
One exemption is worth knowing: if more than 80% of the business’s gross income comes from personal services performed by the members and capital is not a material income-producing factor, the business is exempt from this tax.11Office of Tax and Revenue. DC Business Franchise Tax Rates That covers many solo consultants and freelancers, but you would need to evaluate whether your specific business qualifies.
Tax reciprocity also has nothing to do with professional licensing, concealed carry permits, or any other credential. DC maintains its own licensing rules, so verify your credential status with the relevant DC board separately from any tax question.