so when the MD employer has the PA resident (employees) fill out the MW507 exemption withhold form, all 100% MD state & local should be exempt?
It mentions York or Adams counties so it was confusing. MD Comptroller website has Local Tax Rate table also confuses me with they have a rate for 'Nonresident' and fail to mention that it does not apply to reciprocity states residents.
Bottom Line, with the reciprocity agreement MD has with PA, the PA resident that earns wages from MD employers only owes Fed income tax and the PA State flat-rate (~3.07%) income tax. No need to withhold any MD local nor MD state taxes from each paycheck nor file with MD returns later in tax season.
