New Jersey vs New York: Taxes & Take-Home Pay 2026

New Jersey vs New York: living in one, working in the other

Most people searching this comparison are not choosing a state in the abstract. They are deciding between an apartment in Manhattan or Brooklyn and a home in Jersey City, Hoboken or the suburbs, often with the same job in New York. For them the key facts are how the two states share tax on the same wages, and the New York City income tax that only city residents pay.

Rates are close at the state level. New Jersey runs 1.4% to 10.75%; New York runs 3.9% to 10.9%. The gap appears at the city line: NYC residents add 3.078% to 3.876% on top.

How a New Jersey resident working in New York is taxed

New York taxes nonresidents on wages for work performed in New York, filed on Form IT-203. New Jersey taxes its residents on all income wherever earned, then gives a credit for income tax paid to another state on the same income (Schedule NJ-COJ). The credit cannot exceed the New Jersey tax on that income, so in practice you pay whichever state’s tax is higher.

New Jersey’s reciprocal income tax agreement is with Pennsylvania, where it exempts New Jersey residents’ Pennsylvania wages from Pennsylvania tax. New York wages are not covered, so commuters into New York rely on the NJ-COJ credit instead.

Commuter from New Jersey vs Manhattan resident

A New York City resident on the same $150,000 pays New York State tax of about $7,810 plus city tax of $5,379. The New Jersey commuter above pays $7,810 in total state income tax and no city tax. Moving across the Hudson saves roughly the NYC tax, $5,379 a year at this income, before housing, property tax and commuting costs.

New Jersey payroll deductions are different too: workers pay unemployment, disability and family leave contributions. At $150,000, a New Jersey job costs about $820 a year in these, against $443 for New York’s capped disability and Paid Family Leave deductions.

Remote work: the convenience rule bites New Jersey residents

If your primary office is in New York and you work from home in New Jersey for your own convenience, New York counts those days as New York workdays unless your employer has established a bona fide employer office at your home. Hybrid workers living in New Jersey usually owe New York tax on all of their wages, not just office days.

The New Jersey credit still prevents double taxation, but it means a New Jersey remote worker for a New York firm pays at least the New York rate. Working for a New Jersey-based employer, or one with a qualifying office at your home, changes the outcome.

Retirement, property tax and moving between the two

For retirees, New Jersey’s exclusion is generous at moderate incomes, while New York’s is smaller but has no income limit:

• Social Security: exempt in both states.
• New Jersey retirement income exclusion (age 62+ or disabled): if total income is $100,000 or less, exclude up to $100,000 of pension, annuity and IRA income on a joint return, $75,000 single and $50,000 married filing separately; a partial exclusion applies up to $150,000 of income.
• New York: government pensions fully excluded; up to $20,000 of other qualified pensions excluded per person from age 59½.
• New Jersey property taxes are set by each municipality and county; New York City property taxes on co-ops and condos work differently from suburban bills, so compare actual tax bills.
• Moving mid-year: New Jersey part-year residents file the regular NJ-1040, report income received while resident and prorate credits, exclusions, exemptions and deductions; New York part-year residents file IT-203.