Live in Maryland, Work in Arizona: Which State Taxes Your Paycheck?
Answer
Both states tax the same wages, and a credit undoes the overlap. Arizona withholds as your work state and you file a Arizona nonresident return; Maryland taxes residents on all income, so you also file at home and claim the credit for tax paid to Arizona. File Arizona first.
Last verified
Without an agreement between Maryland and Arizona, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the Arizona figure is an input to the Maryland return, so completing Maryland first means doing it twice.
A Maryland resident taxed by another state on the same income claims the credit for taxes paid to other states on Form 502CR. The credit is capped at the Maryland tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
What you file
- 1Nonresident return · ArizonaForm 140NR
File the Arizona nonresident return FIRST — you need the Arizona tax figure before you can complete Maryland.
- 2Resident return · MarylandForm 502CR
File a Maryland resident return reporting all income, then claim the credit for tax paid to Arizona. The credit is capped at what Maryland would have charged on that same income, so if Arizona taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Maryland | Arizona | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | 4 (Form MW507) | None |
| Convenience rule | No | No |
| Nonresident return | Form 505 with Form 505NR | Form 140NR |
| Credit for other-state tax | Form 502CR | Form 309 |
| Nonresident safe harbour | None published | None published |
| Local income tax | Yes | No |
| Revenue department | Comptroller of Maryland | Arizona Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Arizona and working in Maryland gives:Both states — credit offsets the double tax.
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.
- Remote worker: Maryland → ArizonaHome state only
- 1099 contractor: Maryland → ArizonaHome state, plus the client state if you work there
- Moved mid-year: Maryland → ArizonaTwo part-year returns
Other Maryland pairs
Questions people actually ask
I live in Maryland and work in Arizona. Which state takes the tax out of my paycheck?
Both states tax the same wages, and a credit undoes the overlap. Arizona withholds as your work state and you file a Arizona nonresident return; Maryland taxes residents on all income, so you also file at home and claim the credit for tax paid to Arizona. File Arizona first.
Which state should my employer be withholding for?
Arizona. The wages are sourced to Arizona, so Arizona withholding is correct and there is no Maryland withholding to set up.
Will I end up paying tax twice on the same income?
Not twice over, but you will pay the higher of the two rates. Maryland gives residents a credit for tax paid to Arizona on the same income, claimed on Form 502CR. The credit is capped at the Maryland tax on that income, so if Arizona taxes it more heavily the excess is not refunded by either state.
How current is this?
The Maryland and Arizona rules on this page were last checked against Comptroller of Maryland and Arizona Department of Revenue 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.
- Comptroller of Maryland — individual income taxaccessed 2026-08-07
- Maryland — Form MW507accessed 2026-08-07
- Arizona Department of Revenue — individual income taxaccessed 2026-08-07