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Live in Indiana, Work Remotely for a Maryland Employer: Who Taxes You?

Home state onlyIndiana withholds

Answer

One state, one return: Indiana. Maryland has no wage income tax, so working there changes nothing about what you owe. Your Indiana resident return reports the Maryland income along with everything else, and there is no credit to claim because Maryland charged you nothing.

Last verified

Crossing into a state with no income tax does not lower your tax bill, because your home state is not taxing you on where you work — it is taxing you on where you live. Indiana reaches all of a resident's income, and Maryland adds nothing on top.

Maryland also has a layer below the state one, and it is the layer that survives every agreement: Every Maryland county and Baltimore City levies its own income tax, collected on the state return. A reciprocity agreement exempts wages from the Maryland state tax only — it never reaches the county tax. Nonresidents who are not covered by an agreement pay a special nonresident rate in place of the county tax. Pennsylvania carries one further condition: a Pennsylvania resident exempt from the Maryland state tax remains liable for the Maryland local tax unless their own Pennsylvania jurisdiction imposes no earnings tax on Maryland residents.

What you file

  1. 1Resident return · Indiana

    File a Indiana resident return reporting all of your income.

The two states, side by side

 IndianaMaryland
Taxes wagesYes — flatYes — graduated
Reciprocity partners5 (Form WH-47)4 (Form MW507)
Convenience ruleNoNo
Nonresident returnForm IT-40PNRForm 505 with Form 505NR
Credit for other-state taxSchedule 6 (Form IT-40PNR)Form 502CR
Nonresident safe harbourNone publishedNone published
Local income taxYesYes
Revenue departmentIndiana Department of RevenueComptroller of Maryland
Last verified

The other direction

Reversing the commute does not always reverse the answer. Living in Maryland and working in Indiana gives:Home state only.

Maryland to Indiana →

Same two states, different situation

The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.

Other Indiana pairs

Questions people actually ask

I live in Indiana and work remotely for a Maryland employer. Which state do I pay?

One state, one return: Indiana. Maryland has no wage income tax, so working there changes nothing about what you owe. Your Indiana resident return reports the Maryland income along with everything else, and there is no credit to claim because Maryland charged you nothing.

Which state should my employer be withholding for?

Indiana. Your employer should withhold Indiana tax rather than Maryland tax on these wages. If a Maryland line is showing on your pay stub, raise it with payroll now rather than at filing time.

Does my Maryland employer's location alone create a Maryland tax obligation?

No. Maryland sources wages to the place where the work is physically performed, and it does not apply a convenience-of-the-employer rule that would override that. Days you actually spend working inside Maryland are a different matter — those are Maryland-source income and can require a nonresident return.

How current is this?

The Indiana and Maryland rules on this page were last checked against Indiana Department of Revenue and Comptroller of Maryland on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.

Sources

Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.