Moving to New Jersey

New Jersey taxes residents on everything and nonresidents only on income from New Jersey sources, and the line between the two is domicile: the one place you treat as your permanent home. A domiciliary is a resident unless they kept no permanent home in New Jersey, kept one elsewhere, and spent 30 days or fewer in the state. Someone domiciled elsewhere becomes a resident anyway by keeping a permanent home here and spending more than 183 days in the state. In the year of a move you file as a part-year resident for the months you lived here and, if you had New Jersey-source income in the other months, a nonresident return for those. Wages earned here, New Jersey business and rental income, and gains on New Jersey real estate are New Jersey-source; pensions, interest and dividends are not. Pennsylvania is the only reciprocal state, and the agreement covers wages only; everyone else who works across the line pays the other state and takes a credit on Schedule NJ-COJ.

The Division of Taxation, the Department from here on, lays out the residency rules in Tax Topic Bulletin GIT-6, revised May 2026.

Resident, nonresident, part-year

Domicile is the place you intend to return to after being away. You have one at a time, and it stays put until you establish a new one. The Department weighs the usual evidence: where you vote, the state on your driver’s license and car registration, where your family lives, your bank accounts, the address on your federal return. Moving out of New Jersey means doing those things in the new state, not merely leaving.

The two exceptions. A New Jersey domiciliary who maintains no permanent home here, maintains one elsewhere and spends 30 days or fewer in New Jersey during the year is treated as a nonresident for that year. Conversely, a person domiciled elsewhere who maintains a permanent home in New Jersey and spends more than 183 days here is a statutory resident, taxed on everything. The first rule helps the New Jersey family posted abroad for a year; the second catches the out-of-state executive with a Jersey City apartment.

Part-year. A person who moves in or out during the year files Form NJ-1040 as a part-year resident, reporting only income received while a resident, and, if there was New Jersey-source income during the nonresident months, Form NJ-1040NR for that period. The filing thresholds, $20,000 joint or head of household and $10,000 single, are not prorated, and a part-year resident below them should still file to recover withholding.

The part-year return: months, not days

New Jersey prorates by months. Residence for 15 days or more in a month counts as a full month; fewer counts for nothing. A move on August 20 gives four resident months; a move on August 14 gives five. The proration applies to the exemptions, the pension exclusion (only in the $0 to $100,000 tier), the child tax credit, the earned income credit, the child care credit and the $50 property tax credit. The property tax deduction is simply the tax, or 18% of rent, paid during the resident months. Income is not prorated: the part-year resident reports what was actually received during residency, so a bonus paid in July to someone who moved in August is not New Jersey income, and one paid in September is.

Pension and IRA income splits the same way, by payment date, and a capital gain belongs to the state of residence on the sale date, with one exception: gain on New Jersey real estate is New Jersey-source whoever sells it and whenever.

What a nonresident owes

A nonresident files the NJ-1040NR only for New Jersey-source income: wages for work physically performed in New Jersey, profits of a business carried on here, rent from New Jersey property, gain on New Jersey real estate, a partnership or S corporation’s New Jersey income, and winnings from a New Jersey casino, racetrack or sportsbook. The NJ-1040NR computes tax on all of the nonresident’s income as though they were a resident and prorates it by the New Jersey share, so a high earner pays the higher brackets on the New Jersey slice. Pensions, IRA withdrawals, alimony, interest and dividends are never New Jersey-source to a nonresident.

Two things catch sellers at a closing. A nonresident who sells New Jersey real estate has estimated tax withheld at the closing through the GIT/REP forms (verify) and files the NJ-1040NR to settle up. And any seller of a home over $1,000,000 pays the graduated realty transfer fee of 1% to 3.5% of the price, the seller’s cost since July 10, 2025.

Pennsylvania: the reciprocal agreement and the Philadelphia hole

New Jersey and Pennsylvania agree not to tax each other’s residents on compensation: salaries, wages, tips, commissions and bonuses for work as an employee. A Pennsylvania resident who works in New Jersey owes New Jersey nothing on those wages and gives the employer Form NJ-165, Employee’s Certificate of Nonresidence, to stop New Jersey withholding. A New Jersey resident who works in Pennsylvania gives the employer Pennsylvania Form REV-419EX for the same reason, and reports the wages only to New Jersey. If the wrong state withheld anyway, the fix is a nonresident return in that state with a statement of residency; there is no credit, because no tax should have been due.

The agreement stops at compensation. Self-employment income, a partnership share, rent and a gain on property in the other state are taxed by both states as usual, with the New Jersey resident claiming the credit on Schedule NJ-COJ. And it does not reach Philadelphia. The city’s wage tax applies to nonresidents who work there, 3.43% for the second half of 2025 (verify; the 2026 rate is to come), and a New Jersey resident working in Philadelphia pays it through withholding and then claims it on Schedule NJ-COJ as a tax paid to another jurisdiction. The credit is limited to the New Jersey tax on the same wages, so a Philadelphia commuter usually ends up paying the city rate and a little to New Jersey on top.

New York and everywhere else: Schedule NJ-COJ

A New Jersey resident who works in New York, Delaware, Connecticut or any other state pays that state’s tax on the wages earned there, files a nonresident return there, and claims a credit on Schedule NJ-COJ. The credit is the smaller of the tax paid to the other state on the doubly taxed income, or the New Jersey tax on that same income, found by multiplying the New Jersey tax by the share of New Jersey gross income taxed elsewhere (Worksheet I). Where the other state’s rates are higher, as they are for most New York commuters, the credit wipes out the New Jersey tax on the wages and the net New Jersey bill falls on everything else: the spouse’s New Jersey wages, interest, dividends, gains. New York City’s resident tax does not apply to a New Jersey commuter. The New Jersey return goes last, because it needs the other state’s figures.

The credit is not available for Pennsylvania wages, for foreign taxes, or for tax another state charged on income New Jersey does not tax, since there is no New Jersey tax to offset.

Remote work: two convenience rules

Where a remote worker’s wages are taxed depends on two mirror-image rules. New York’s long-standing “convenience of the employer” rule treats a New York employer’s nonresident employee as working in New York on any day worked from home for the employee’s convenience rather than the employer’s necessity. So a New Jersey resident employed by a Manhattan firm who works from Montclair three days a week is taxed by New York on all five, and claims the NJ-COJ credit. For 2020 through 2023 New Jersey offered residents who sued New York and won a refund a refundable credit of 50% of the extra New Jersey tax that resulted, claimed on an amended NJ-1040 with the judgment attached; it covers only those four years.

Since 2023 New Jersey has had its own rule, P.L.2023, c.125, retroactive to January 1, 2023. It applies to nonresident employees of New Jersey employers who live in a state with a convenience rule of its own, New York, Delaware and Nebraska on the Department’s current list, and sources their work-from-home days to New Jersey under the home state’s own test, unless the employer requires the out-of-state work. A New York resident working from Brooklyn for a Newark employer is taxed by New Jersey on those days and takes a credit on the New York return. Connecticut’s rule is reciprocal and does not trigger New Jersey’s; Pennsylvania residents are excluded by the agreement. Residents of states without a convenience rule are taxed by New Jersey only on days actually worked here. Either way the employee has to prove the day count, so a log is the first thing to keep.

Military

A servicemember’s domicile does not change with orders. A New Jersey domiciliary stationed elsewhere remains a resident, taxed on military pay except combat zone pay; one domiciled elsewhere and stationed here is a nonresident whose military pay is not New Jersey-source. A civilian spouse who qualifies as a nonresident under the federal Military Spouses Residency Relief Act is not taxed on New Jersey wages. Military pensions are exempt for everyone.

The year you move: what to do

• Pick the date and keep the evidence: the closing or lease date, the new driver’s license and voter registration. The Department audits domicile by documents.
• Fix the withholding. A new New Jersey employee files Form NJ-W4; a Pennsylvania resident adds Form NJ-165; a New Jersey resident starting a Pennsylvania job files REV-419EX.
• Split the income by payment date. Get a year-to-date pay statement as of the move.
• Prorate the exemptions and credits by months, remembering the 15-day rule.
• Deduct the property tax or 18% of rent actually paid during the resident months.
• Check estimated payments once New Jersey tax after withholding will exceed $400.
• File the other state first, then New Jersey with Schedule NJ-COJ if any income was taxed by both.
• Property tax relief follows October 1. ANCHOR goes to whoever owned or rented the home on October 1 of the benefit year; Senior Freeze needs three full years in the home.