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New Jersey Governor Chris Christie Ends Reciprocal Income Tax Deal with Pennsylvania

New Jersey Governor Chris Christie Ends Reciprocal Income Tax Deal with Pennsylvania

Earlier this month, New Jersey Governor Chris Christie announced that he is ending a nearly 40-year-old personal income tax agreement with Pennsylvania that was enacted in 1977.  This change will affect both Pennsylvania and New Jersey residents working in their respective neighboring state as a non-resident.

For nearly four decades, this agreement allowed New Jersey residents working in Pennsylvania to file and pay their income taxes based on their state of residence.  The same is true for Pennsylvania residents working in New Jersey.  With the end of this agreement, employees will have to file two state income tax returns.  They will be required to file a nonresident state income tax return for the state in which they work, and a resident income tax return in the state in which they live.  They may also claim a credit for taxes owed to their non-resident state on their resident state return.

Gov. Christie said that the state’s financial situation has necessitated the change and is necessary to fill a $250 million hole in the state budget.

Article written by Chris Johnson. For additional information please contact Elizabeth F. Hassler, CPA at efhassler@herbein.com