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Assuming you work in NYC you will still pay NY state income taxes but you will save on NYC city income tax. You will also have to file taxes with NJ but you will get credit for what you paid NY and have a zero balance left.
If you worked in a third state that had lower taxes than NJ, than you would have had to pay NJ the difference between NJ taxes and what you paid the 3rd state. basically when you live in one state and work in another you will pay the higher of the two. Since NY is higher than NJ it doesn't hurt you to move to NJ and you save the city tax.
My wife and I live in IL but she works in IN. IN has about 1.5% less tax and we end up having to pay that as a penalty to live in IL.
If you work in NY and live in New Jersey, there will be no difference in state tax, you will basicallly pay to New York.
However if you move out of the City you can save the City Personal Income tax...sliding scale from 2.9% to 3.6% of Income. NYC Residents get a little credit for school tax...very little.
Remember too, if you choose Jersey City, it is an Enterprise Zone with HALF sales tax...3.5%. New York as we know has a Sales Tax of approximately 9%. And that goddamned annoying bottle bill "tax" which can add 20 or 30% to a six-pack.
If you move to Queens, you will pay the city income tax of 3.65% extra. The state rates between NJ and NY are fairly similar: 6.37% NJ, 6.45-6.65% NY.
If you make over $500,000, the extra part (above $500k) goes to 8.97% in NJ. The same thing doesn't happen until $1,000,000 income in NY where the rate goes to 8.82%.
There are other complications- what the deductions are, that NY recaptures taxes if you make over $100k (makes you pay the higher rate on all your income while lesser income folk pay the lower rates on the first 20k or 40k)- these things will change the tax at the bottom and the effective rate.
But basically, you will pay about 4% more in New York City.
Interesting, in regards to the NY tax..I was looking online and there is a tax rate plus a fixed amount you are charged for each bracket. So I just calculated my NY state taxes based on the rates I found on the states website and it comes out to about 11% of my taxable income, in NY state tax alone..does that seem right? Taxable income is 90,000
So if the OP is making 90K, it seems that he will pay a little over $3000 to NYC which he would not if he moved to Jersey. $250 a month is not insignificant.
Okay, so I did some calculations and I'm coming up with:
Federal Income Tax: 18k (~21%)
NY State Tax: 5.5K (~6.13%)
SS Tax: 3.7K (4.2%)
Medicare Tax: 1.3K (1.45%)
For combined tax of 29.2K (~32.5%) if I stay in NJ
But if I stay in NY, that is I guess 3K in city taxes (~3.4%), meaning it will be 32.2k in taxes (~35.9%) assuming no deductions etc.
Wow, that's a lot of taxes. And since it was said in this thread that the tax rate in JC compares to 3.5% vs 9% in NY, if I spend 1.5k a month on taxable items, that is about another 800-900 that is going to go in sales tax. So all in, about $325 more every month out of my pocket for living in NY
Okay, so I did some calculations and I'm coming up with:
Federal Income Tax: 18k (~21%)
NY State Tax: 5.5K (~6.13%)
SS Tax: 3.7K (4.2%)
Medicare Tax: 1.3K (1.45%)
For combined tax of 29.2K (~32.5%) if I stay in NJ
But if I stay in NY, that is I guess 3K in city taxes (~3.4%), meaning it will be 32.2k in taxes (~35.9%) assuming no deductions etc.
Wow, that's a lot of taxes. And since it was said in this thread that the tax rate in JC compares to 3.5% vs 9% in NY, if I spend 1.5k a month on taxable items, that is about another 800-900 that is going to go in sales tax. So all in, about $325 more every month out of my pocket for living in NY
Does this math seem about right?
Looks about right, but I think the social security reduction to 4% runs out in two months time unless something is done, then its back to about 6%. So you might want to consider that also.
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