PHILADELPHIA (KYW Newsradio) — New Jersey lawmakers want a better deal for its residents who work outside the state, or work from home for companies based outside the state. However, their proposals wouldn’t impact people who work for companies based in Pennsylvania.
Legislation from a group of bipartisan lawmakers, along with Gov. Phil Murphy’s office, aims to achieve parity between New Jersey and New York, which does not provide similar tax credits.
The proposed law has three components. One incentivizes residents to sue other states for taxes collected on income for work performed in New Jersey, what essentially becomes double-taxed income.
Another allows the state to tax people working remotely for New Jersey-based companies. This component is meant to replicate the law New York currently uses, kind of an “eye-for-an-eye” approach.
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A third part provides up to $10 million in grants for out-of-state companies to open a New Jersey office.
One of the bill sponsors, state Sen. Jon Bramnick, R-Westfield, said there will be no change for South Jersey residents working in Pennsylvania, thanks to the Reciprocal Tax Agreement.
“That’s all been worked out, and the New Jersey tax office isn’t going to do anything with respect to the Pennsylvania agreement,” Bramnick said.
“Nothing is changing between Pennsylvania and New Jersey. That agreement is locked in, and this will have absolutely no effect on it.”
That long-standing agreement provides a credit to New Jersey residents on state and local taxes paid elsewhere, like the Philadelphia city wage tax, and it works both ways.
He says the long-standing issue is that New York isn’t playing by the same rules, and the issue was accentuated by the increase in remote working due to the COVID-19 pandemic.
“This is an issue that warrants no debate; on both sides of the aisle, we can all agree that we must protect our residents from unfair and inordinate taxation from other states,” said Murphy.
“The proposals I’m announcing today, while supporting our hard-working residents in their efforts to dispute such taxation, will help promote employment in New Jersey and counteract lost tax revenue to our neighbors. Amid profound political divisions across the country, I look forward to achieving bipartisan support for legislation that will ensure a fiscally healthier and fairer New Jersey.”
This legislation would need to pass both chambers of the state house before the governor can sign it into law. There was no initial timeline set for any votes.
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