New Jersey/Pennsylvania Reciprocal Tax Agreement Will Continue

Posted by Lisa Harvey-Cicione, CPA

On November 22, 2016, NJ Governor Christie announced he has opted to keep the NJ/PA reciprocal tax agreement in place.  He reconsidered ending the 40 year old deal with Pennsylvania due to NJ health benefit reforms approved by the NJ State legislature.

Gov. Christie’s turn around reverses the notice he gave to Pennsylvania to end the tax agreement as of January 1, 2017.

The NJ/PA reciprocity tax agreement will safeguard thousands of NJ and PA residents who commute to work in the neighboring state from having to file income tax returns in the state of employment.  They will continue to pay state income taxes only in the state where they live.

It is a relief for employers of both states as well.  If the NJ/PA reciprocal tax agreement had ended employers would need to start withholding for income taxes of nonresident employees.  Now they will not have to.

If you have any questions about this notice, please contact your tax advisor.

Photo by Michael W. May (License)

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