Update: Christie to Continue NJ/PA Reciprocal Tax Agreement
November 28, 2016
By Gary Bingel, CPA
Governor Christie announced in November that he will not terminate the 40-year agreement between New Jersey and Pennsylvania covering personal income taxes. The nearly quarter-million people who commute to work across the Delaware River will still be taxable on their wages only in the state in which they live.
Set to take effect on January 1, 2017, the revocation of the reciprocal arrangement would have added approximately $180 million to NJ revenue. High-income Pennsylvania residents working in New Jersey would have had to pay as much as 8.9% in personal tax, vs. PA’s flat rate of 3.07%. Low-income NJ residents working in PA would also have seen their tax rates increase. Christie said that he is able to maintain the agreement because new legislation reforming prescription benefits for NJ public workers will save the state $200 million.