The lack of a tax deal between New Jersey and New York is also seen as a net loser for New Jersey`s budget, especially with many New Jerseyers who used to work in New York, who were now working because of the pandemic. In addition, many people in the garden state also pay higher taxes because of differences in income tax structures in the two countries. This is particularly advantageous for Pennsylvania residents, who pay a flat-rate national income tax rate of 3.07 percent, compared to New Jersey`s progressive tax, which ranges from 1.4 percent to 8.97 percent for those earning more than $500,000. New Jersey residents, who are in the lowest income tax class and work in Pennsylvania, also pay less public taxes. The agreement also allows New Jersey residents to obtain an income tax credit from Philadelphia City. But under a law passed last week unanimously by members of the Senate`s Budget and Appropriation Committee, state lawmakers would have the power to prevent at least one governor from taking unilateral action against mutual agreement. “New Jersey would do very well if we had the same agreement (with New York),” said Sen. Steve Oroho (R-Sussex). Given that Governor Christie could use it as leverage to negotiate budgetary issues, it is possible that this agreement will be rescinded before taking effect. Unfortunately, there is no doubt that some employers and subcontractors have wasted time and resources preparing for policy change. There is no doubt that while the change generates additional revenue for New Jersey, it would have had a negative impact on many businesses and commuters between states. But the agreement will be maintained for the foreseeable future. New Jersey has had reciprocity with Pennsylvania in the past, but Gov.
Chris Christie terminated the contract effective January 1, 2017. You should have filed a non-resident return to New Jersey from 2017 and paid taxes there if you work in the state. Fortunately, Christie reversed course when a hue and a cry from residents and politicians were edited. The map below shows 17 orange states (including the District of Columbia) where non-resident workers living in different states do not have to pay taxes.