Pennsylvania and New Jersey, two neighboring states in the northeastern region of the United States, have had a reciprocal tax agreement in place for decades. This agreement allows residents who live in one state and work in the other to pay income tax only to their resident state, rather than having to file taxes in both states.

The agreement, which was first signed in 1977, was designed to simplify tax filing for those who commute between the two states for work. Under the agreement, residents of Pennsylvania who work in New Jersey do not have to pay income tax to New Jersey, and vice versa. Instead, they only have to file taxes with their resident state.

This reciprocal tax agreement is a great benefit for those who work in one state and live in the other, as it eliminates the need to file multiple tax returns and potentially pay taxes twice. It also helps to avoid confusion and reduce administrative burdens for both individuals and businesses.

However, it’s important to note that not all states have reciprocal tax agreements with other states. In fact, many states require non-residents who earn income in their state to file a tax return and pay taxes on that income.

In addition to the reciprocal tax agreement, Pennsylvania and New Jersey have also established a number of other agreements and partnerships over the years. These include agreements related to transportation, economic development, and environmental protection.

Overall, the reciprocal tax agreement between Pennsylvania and New Jersey is a great example of how neighboring states can work together to simplify tax filing and reduce administrative burdens for their residents. If you live in one state and work in the other, be sure to take advantage of this agreement when filing your taxes each year.