Live in Nebraska, Work in Pennsylvania: Which State Taxes Your Paycheck?
Answer
Expect withholding in Pennsylvania and a return in both. Nebraska and Pennsylvania hold no reciprocal agreement, so the overlap is resolved after the fact: Pennsylvania taxes the Pennsylvania-source wages, and your Nebraska resident return claims a credit for that tax against the Nebraska liability on the same income.
Last verified
Two states can lawfully tax the same wages: Pennsylvania because the work happened there, Nebraska because you live there. Nothing prevents the overlap in advance — it is unwound afterwards, on the Nebraska return, through the credit for taxes paid to another state.
A Nebraska resident taxed by another state on the same income claims the credit for taxes paid to other states on Form 1040N Schedule II. The credit is capped at the Nebraska tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
Pennsylvania also has a layer below the state one, and it is the layer that survives every agreement: Pennsylvania's Act 32 earned income tax is levied by municipalities and school districts across the state, and Philadelphia levies its own wage tax on residents and on nonresidents who work in the city. None of it is covered by the reciprocal agreements, and Philadelphia's nonresident wage tax applies from the first dollar.
What you file
- 1Nonresident return · PennsylvaniaForm PA-40 (nonresident)
File the Pennsylvania nonresident return FIRST — you need the Pennsylvania tax figure before you can complete Nebraska.
- 2Resident return · NebraskaForm 1040N Schedule II
File a Nebraska resident return reporting all income, then claim the credit for tax paid to Pennsylvania. The credit is capped at what Nebraska would have charged on that same income, so if Pennsylvania taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Nebraska | Pennsylvania | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | None | 6 (Form REV-419) |
| Convenience rule | Yes — general rule | Yes — general rule |
| Nonresident return | Form 1040N with Schedule III | Form PA-40 (nonresident) |
| Credit for other-state tax | Form 1040N Schedule II | Schedule G-L |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | Yes |
| Revenue department | Nebraska Department of Revenue | Pennsylvania Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Pennsylvania and working in Nebraska 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: Nebraska → PennsylvaniaConvenience-of-the-employer rule — both states tax you
- 1099 contractor: Nebraska → PennsylvaniaHome state, plus the client state if you work there
- Moved mid-year: Nebraska → PennsylvaniaTwo part-year returns
Other Nebraska pairs
Questions people actually ask
I live in Nebraska and work in Pennsylvania. Which state takes the tax out of my paycheck?
Expect withholding in Pennsylvania and a return in both. Nebraska and Pennsylvania hold no reciprocal agreement, so the overlap is resolved after the fact: Pennsylvania taxes the Pennsylvania-source wages, and your Nebraska resident return claims a credit for that tax against the Nebraska liability on the same income.
Which state should my employer be withholding for?
Pennsylvania. The wages are sourced to Pennsylvania, so Pennsylvania withholding is correct and there is no Nebraska 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. Nebraska gives residents a credit for tax paid to Pennsylvania on the same income, claimed on Form 1040N Schedule II. The credit is capped at the Nebraska tax on that income, so if Pennsylvania taxes it more heavily the excess is not refunded by either state.
How current is this?
The Nebraska and Pennsylvania rules on this page were last checked against Nebraska Department of Revenue and Pennsylvania 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.
- Nebraska Department of Revenue — individual income taxaccessed 2026-08-07
- Pennsylvania Department of Revenue — individual income taxaccessed 2026-08-07
- Pennsylvania — Form REV-419accessed 2026-08-07
- Pennsylvania Personal Income Tax Guide — Income Subject to Tax Withholdingaccessed 2026-08-07