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Old 10-09-2014, 11:43 PM
 
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I work in NJ, but have been considering to buy a house in PA and move there. Is there any state income tax benefit for being a resident of PA while working full-time in NJ?
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Old 10-10-2014, 05:11 AM
 
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If you live in PA and work in NJ, you only pay PA income tax. So it depends on your tax bracket. If you are in a higher bracket, you will be at an income tax advantage living in PA since they have a flat 3.07% tax rate. NJ's is progressive, with the top rate being 8.97%.
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Old 10-10-2014, 07:50 AM
 
Location: Pennsylvania & New Jersey
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Default PA/NJ Reciprocal Income Tax Agreement

Quote:
Originally Posted by eastcoastguyz View Post
I work in NJ, but have been considering to buy a house in PA and move there. Is there any state income tax benefit for being a resident of PA while working full-time in NJ?
Quote:
Originally Posted by orangenj View Post
If you live in PA and work in NJ, you only pay PA income tax. So it depends on your tax bracket. If you are in a higher bracket, you will be at an income tax advantage living in PA since they have a flat 3.07% tax rate. NJ's is progressive, with the top rate being 8.97%.
This is due to a reciprocal legal arrangement between the states of Pennsylvania and New Jersey that agrees to exempt the other's residents from non-resident income tax on 'compensation.'
See: NJ Division of Taxation - Income Tax - PA/NJ Reciprocal Income Tax Agreement. The exemption does NOT apply to income such as rents, capital gains, business income, self-employment income, etc.

With regard to wages, orangenj is absolutely correct. But the opposite is true for those with a low income. If you are in a low bracket, you will be at an income tax disadvantage living in PA.
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Old 10-11-2014, 11:49 AM
 
223 posts, read 321,484 times
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Quote:
Originally Posted by MaverickDD View Post
This is due to a reciprocal legal arrangement between the states of Pennsylvania and New Jersey that agrees to exempt the other's residents from non-resident income tax on 'compensation.'
See: NJ Division of Taxation - Income Tax - PA/NJ Reciprocal Income Tax Agreement. The exemption does NOT apply to income such as rents, capital gains, business income, self-employment income, etc.

With regard to wages, orangenj is absolutely correct. But the opposite is true for those with a low income. If you are in a low bracket, you will be at an income tax disadvantage living in PA.
Yes, I should have specified wages. Business income is taxed by NJ if you're a PA resident, as Maverick said.
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