Live in Maryland, Work in Arkansas: Which State Taxes Your Paycheck?
Answer
You file twice: Arkansas first, then Maryland. There is no reciprocity agreement between these two states, so Arkansas taxes the income where it was earned and Maryland taxes it again as resident income — with the resident credit removing the double charge rather than an exemption form preventing it.
Last verified
Without an agreement between Maryland and Arkansas, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the Arkansas 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 · ArkansasForm AR1000NR
File the Arkansas nonresident return FIRST — you need the Arkansas 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 Arkansas. The credit is capped at what Maryland would have charged on that same income, so if Arkansas taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Maryland | Arkansas | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | 4 (Form MW507) | None |
| Convenience rule | No | No |
| Nonresident return | Form 505 with Form 505NR | Form AR1000NR |
| Credit for other-state tax | Form 502CR | Form AR1000TC |
| Nonresident safe harbour | None published | None published |
| Local income tax | Yes | No |
| Revenue department | Comptroller of Maryland | Arkansas Department of Finance and Administration |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Arkansas 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 → ArkansasHome state only
- 1099 contractor: Maryland → ArkansasHome state, plus the client state if you work there
- Moved mid-year: Maryland → ArkansasTwo part-year returns
Other Maryland pairs
Questions people actually ask
I live in Maryland and work in Arkansas. Which state takes the tax out of my paycheck?
You file twice: Arkansas first, then Maryland. There is no reciprocity agreement between these two states, so Arkansas taxes the income where it was earned and Maryland taxes it again as resident income — with the resident credit removing the double charge rather than an exemption form preventing it.
Which state should my employer be withholding for?
Arkansas. The wages are sourced to Arkansas, so Arkansas 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 Arkansas on the same income, claimed on Form 502CR. The credit is capped at the Maryland tax on that income, so if Arkansas taxes it more heavily the excess is not refunded by either state.
How current is this?
The Maryland and Arkansas rules on this page were last checked against Comptroller of Maryland and Arkansas Department of Finance and Administration 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
- Arkansas Department of Finance and Administration — individual income taxaccessed 2026-08-07