MD-DC Tax Reciprocity 2026

MD-DC reciprocity is active. Combined with the VA-DC agreement, this creates a complete DC metro reciprocity zone of ~700K daily commuters.

Quick answer: Yes, active reciprocity. MD residents working in DC file D-4A to skip DC withholding. DC residents working in MD file MW507 to skip MD withholding. Local MD county piggyback tax (2.25–3.2%) is NOT covered by reciprocity.

How It Works Both Directions

ScenarioForm To FileResult
Live MD, work DCD-4A (to skip DC)No DC withholding. Pay MD tax only.
Live DC, work MDMW507 (to skip MD)No MD withholding. Pay DC tax only.

Worked Example

Leila lives in Bethesda MD, works in DC, earns $110,000. With reciprocity: files D-4A with DC employer. DC withholds $0. MD withholds ~$6,050 (5.5% state) + Montgomery County 3.2% = ~$3,520 local. Total ~$9,570 withheld. She files only MD resident return. Note: the county piggyback tax applies to all her wages even though work is in DC.

Step-by-Step: Claim the Exemption

  1. Download the work-state exemption form (DC form D-4A for MD-residents-working-in-DC; MD form MW507 for DC-residents-working-in-MD).
  2. Fill in name, SSN, home address (must be in the reciprocity state), and current date.
  3. Submit to HR/payroll at your employer.
  4. Verify on your next paystub that work-state tax withholding is $0.
  5. Update your home-state W-4 to make sure you withhold enough for full income tax.
  6. File only a resident return in your home state next April (unless you have non-wage work-state income).

OBBBA 2026 Note

OBBBA 2026 (One Big Beautiful Bill Act) raised the federal SALT cap to $40,000. This matters for reciprocity commuters who itemize: your full home-state income tax is now more likely to be fully deductible on federal Schedule A, making the state-level tax difference between your home and work state a real after-tax driver of commute value. Check each state rate: MD top rate 5.75% state + 2.25–3.2% county, DC top rate 10.75% (over $1M).

FAQ

Does MD-DC reciprocity cover Montgomery County or PG County piggyback tax?

No. Maryland county-level piggyback income tax (2.25% to 3.2% depending on county) is assessed on all MD residents regardless of where they work. Reciprocity only exempts the DC state-level withholding.

What form do MD residents file to skip DC withholding?

File D-4A (Certificate of Non-residence in DC) with your DC employer. Resubmit each year, or whenever your home address changes. DC employers are required to accept it.

I am a DC resident working in Maryland — what do I file?

File form MW507 (Employee’s Maryland Withholding Exemption Certificate) with your MD employer. Check box 6 claiming reciprocity exemption as a DC resident. MD stops withholding state tax, but may still withhold county tax.

Does DC resident working in MD owe MD county tax?

No. The county tax is a piggyback on MD state tax, so if you’re exempt from MD state tax under reciprocity, you’re automatically exempt from county tax too. Your full MD withholding should be $0.

What if I commute between all three — VA, MD, and DC?

File the appropriate exemption in the state where you work (D-4A for DC work, MW507 for MD work, VA-4 for VA work). You pay state tax only where you live. Three jurisdictions, one resident return.

Model Your Take-Home

See exact post-reciprocity paycheck with MD or DC withholding.

Paycheck Calculator →
Other reciprocity pairs:
NJ-PA · VA-DC · MD-VA · MD-PA · PA-OH · PA-WV · Full matrix

Tax calculations are estimates for educational and informational purposes only. This site does not provide tax, legal, or financial advice. Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. Data sourced from IRS publications and official state tax authority websites.

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