The reciprocal agreement applies only to W-2 income. If you work in a reciprocal state, you are only required to pay income tax to the state that you live in, on W-2 income earned in the reciprocal state. If you have any other type of income from another state, you would have to pay income tax to the state that is the source of the other income, whether or not it is a reciprocal state.
You have to pay tax to the state that you live in on all of your income, no matter where the income is from. If the same income is taxed by two states, one state will give you a credit for tax paid to the other state. Exactly how that works depends on the specific two states that are involved. The most common arrangement is that the state you live in will give you credit for part or all of the tax that you pay to the other state, but there are exceptions.
