How do I receive local credit for income tax paid to another state?

You must first apply credit for income taxes paid to another state against your Pennsylvania state income tax liability. You may use any remaining credit against local earned income tax liability. The same dollar of the out-of-state tax cannot be claimed as credit against liability for both state and local taxes in Pennsylvania. 

No credit is given for state earned income tax paid to states that reciprocate with the Commonwealth of Pennsylvania. For instance, if you work in and pay state tax to the state of New Jersey, you cannot apply credit for the New Jersey state tax against your home municipality’s local tax. To recover tax paid to a reciprocating state you must apply to that state for a refund. Reciprocal states include: Maryland, New Jersey, Ohio, Virginia, West Virginia and Indiana. No credit is allowed for tax paid outside of the United States. To assist you in computing your out-of-state credit, access the Local Earned Income Tax Return form and refer to LINE 12: OUT-OF-STATE TAX CREDIT WORKSHEET.