Paying Employees Who Live in Massachusetts and Work in Rhode Island (or the Other Way Around)

By the Jette Payroll team · October 16, 2026 · 2 min read

If your business is anywhere near the state line, you probably have a Pawtucket employee who lives in Attleboro, or a Seekonk shop with a crew from East Providence. Payroll for these employees takes more care, because Rhode Island and Massachusetts do not have a reciprocity agreement.

What "no reciprocity" means

Some neighboring states let you withhold only for the state where the employee lives. Rhode Island and Massachusetts don't. The general rule is that wages are taxed by the state where the work is done, and the employee's home state gives them a credit for tax paid to the other state.

• Lives in MA, works in RI: withhold Rhode Island income tax. The employee claims a credit on their Massachusetts return. Some employees also ask for Massachusetts withholding to cover any difference.
• Lives in RI, works in MA: withhold Massachusetts income tax. The employee claims a credit on their Rhode Island return.

To withhold for a state, your business generally needs to register with that state as an employer, even if you don't have an office there.

Remote and hybrid work

Remote work makes this harder. An employee who works from home in Massachusetts for a Rhode Island company may be doing Massachusetts work on those days. Where the work is physically done matters, so it's worth tracking which days employees work where.

Paid leave and disability programs

Each state also runs its own leave program, funded through payroll:

• Rhode Island: Temporary Disability Insurance (TDI) and Temporary Caregiver Insurance, withheld from employee wages.
• Massachusetts: Paid Family and Medical Leave (PFML), with contributions split between employer and employee depending on company size.

Which program applies depends on where the employee works, and getting it wrong means filing corrections with both states.

Getting it right

1. Keep a current home address and primary work location for each employee.
2. Register for withholding and unemployment in every state where you have workers.
3. Review it whenever someone moves or starts working remotely.
4. Make sure your payroll provider is set up for both states.

Jette Payroll works with employers on both sides of the line, so this is routine for us.

This article is general information, not tax, legal or HR advice for your specific situation. Payroll rules change; talk with us before acting on it.