2026 Tax Year
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Pennsylvania
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Unlike New Jersey, New York has no reciprocal tax agreement with Pennsylvania — so if you live in one state and work in the other, you'll likely file (and possibly owe) tax in both. This guide walks through exactly how the dual-filing and credit process works, how PA's flat 3.07% compares to New York's graduated brackets, and a New York rule that can catch remote workers off guard. For your own PA-side numbers, run them through the Pennsylvania Paycheck Calculator on the homepage.
Quick answer: Pennsylvania and New York do not have a reciprocal tax agreement — unlike Pennsylvania and New Jersey. If you live in one state and work in the other, both states can tax your wages: the work state taxes it first as nonresident income, and your home state then gives you a credit for tax paid to the other state, so you generally aren't taxed twice on the same dollar. Because New York's top rate (10.9%) runs well above Pennsylvania's flat 3.07%, PA residents commuting into New York almost always end up filing (and sometimes still owing a top-up) in both states.
Pennsylvania has reciprocal agreements with six neighboring states — but New York isn't one of them. New York has chosen not to enter reciprocity agreements with any state, largely because it would mean giving up tax revenue collected from out-of-state commuters working in New York.
New York taxes your NY-source wages as a nonresident. You then file a Pennsylvania resident return and claim a credit for tax paid to New York, limited to what PA would have charged on that same income.
Pennsylvania taxes your PA-source wages as a nonresident at the flat 3.07% rate. You then file a New York resident return and claim a credit for the PA tax paid, against your New York liability.
The resident-state credit is designed to prevent true double taxation — but it's typically capped at the lower of the two states' tax on that income, so if the work state's rate is higher, you can still owe a top-up to your home state... or vice versa.
Pennsylvania's flat rate makes it simple to calculate. New York runs nine progressive brackets, and New York City residents pay an additional city-level tax on top of the state rate.
| Filer Type | Pennsylvania | New York |
|---|---|---|
| Structure | Flat rate | Graduated, 9 brackets |
| Rate on lowest bracket | 3.07% | ~4.0% |
| Rate around $80,000–$215,000 | 3.07% | ~6.0% |
| Rate around $215,000–$1,000,000+ | 3.07% | ~6.85% |
| Top rate (highest earners) | 3.07% | 10.9% |
| New York City resident add-on | N/A | +3.078%–3.876% |
Rates shown are state (and, where noted, NYC city) income tax only — federal tax and FICA are separate. New York bracket thresholds differ by filing status; figures above are simplified for comparison. Always confirm exact thresholds with the NY Department of Taxation and Finance.
Say a Pennsylvania resident commutes into New York for a $75,000 job. Here's roughly how the two-state math plays out, state income tax only.
| Step | Approx. Amount |
|---|---|
| New York nonresident tax owed on $75,000 NY-source wages | ≈ $3,700 |
| Pennsylvania resident tax on the same $75,000 (flat 3.07%) | ≈ $2,303 |
| PA resident credit for NY tax paid (capped at PA's own tax on that income) | ≈ $2,303 |
| Net PA tax due after credit | ≈ $0 |
| Total state tax burden (NY's higher rate governs) | ≈ $3,700 |
Illustrative estimate only, ignoring deductions and exemptions. The key takeaway: because New York's rate on this income is higher than Pennsylvania's flat 3.07%, the PA credit fully offsets PA's own tax, but the commuter still ends up paying New York's higher rate overall — there's no scenario where reciprocity lets them pay PA's lower rate instead, the way it works with New Jersey.
This is the detail that surprises the most remote and hybrid workers. New York applies a "convenience of the employer" rule: if your employer is based in New York and you work remotely from Pennsylvania for your own convenience rather than a genuine business necessity, New York can still treat your income as New York-source and tax it — even on the days you never set foot in the state.
In practice, this means a Pennsylvania resident working fully remote for a New York-headquartered company may still owe New York nonresident tax on all of their wages, not just for days physically worked in New York, unless they can show their employer required the remote arrangement for a bona fide business reason (not merely personal preference). Pennsylvania's resident credit still applies to offset PA tax on that income, following the same mechanism described above — but it doesn't eliminate the New York filing obligation.
If this applies to you, review the New York Department of Taxation and Finance's guidance on the convenience rule, and consider speaking with a tax professional familiar with multistate remote-work situations — the rule is genuinely one of the more complex corners of interstate tax law.
PA resident working in NY: File New York nonresident return Form IT-203 reporting your NY-source wages and paying NY tax. Then file a Pennsylvania resident return (PA-40) and complete Schedule G-L, Credit for Taxes Paid to Other States, to claim credit for the NY tax against your PA liability.
NY resident working in PA: File a Pennsylvania nonresident return (PA-40, nonresident) reporting your PA-source wages and paying PA's flat 3.07%. Then file your New York resident return and claim a credit for PA tax paid against your NY liability, using New York's resident credit schedule.
Keep documentation: Both states generally want a copy of the other state's return and your W-2 attached or available if requested, especially since the credit calculation depends on how much of your income was actually taxed by the other state.
Every figure and rule in this guide is drawn from the following official state sources. Confirm your own situation directly with these agencies before filing.