19 Feb Would I pay more in N.J. or N.Y. tax on my income?

Q. I earn $150,000 a year and live in New Jersey. I will have the choice to have my workplace be in New York City or in New Jersey. Deductions aside, how much would I pay in state taxes for each location? Where am I better off working?
— Commuter, maybe

A. Interesting question.

We’re assuming you’d like to pay the smallest possible amount of state income tax.

Let’s get to the numbers.

A New Jersey resident working in the state at your salary level would incur tax of $7,365 based on 2021 tax rates, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.

This same individual, if working in New York City, would incur a New York State nonresident tax of $8,908, he said.

“Whereas New York City residents incur New York City personal income tax, there is no longer a New York City nonresident tax, which was repealed many years ago,” Becourtney said. “The New Jersey resident tax will be fully offset by the New York nonresident tax via a resident credit.”

This leaves you with a difference of $1,543.

Becourtney said many taxpayers think that if they work for a New York City-based employer from their New Jersey home — which has become commonplace during the pandemic — that they will escape New York nonresident taxation.

“That is not the case as New York imposes its tax on a New Jersey resident working for a New York City-based employer from their home unless the employer has established a bona fide employer office at the employee’s home, which is very rare,” he said.

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This story was originally published on Feb. 19, 2022.

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