MD/PA local tax question

I live in PA and recently accepted a job offer in Silver Spring, MD. The town I live in has 0.75% local income tax. I am now trying to understand how local tax works in my scenario.

I was asked to fill out MD tax withhold form by my employer (MW507) today. I also filled out a PA tax form for state tax. Based on MW507 box 5, I am exempt from MD state tax because I am a PA resident and there is a reciprocal agreement between the two states.

However, it seems like I am still subject to MD Local Tax based on Box 7: I am subject to MD local tax because I live in a PA jurisdiction that impose an earnings or income tax on Maryland Residents. Is my understanding correct? Does that mean I have to pay my PA local tax, use the amount to claim the credit from the nonresident MD local tax (2.25%) and then pay the PA state tax? Thanks!

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