What is reciprocity in the context of multi-state taxation?

Reciprocity refers to an agreement between two or more states that allows residents of one state to be exempt from paying income tax in another state where they earn income from employment. This agreement helps prevent double taxation for individuals who live in one state but work in a neighboring state. Reciprocity agreements vary in terms and conditions, so it’s important to check the specific reciprocity agreements between the states involved. Employees may still need to file a non-resident return in the state where they work and claim the exemption.