Gov. Christie on Friday scrapped a decades-long agreement between New Jersey and Pennsylvania that has allowed taxpayers to pay income tax in the state where they live, not where they work. The change is set to take effect Jan. 1, though Christie suggested he might reverse course if the Democratic-controlled Legislature fills a budget hole by acting swiftly to reduce public employees’ health-care costs.
Christie’s decision means high-income Pennsylvania residents in Bucks County and elsewhere who work in the Garden State would be subject to Trenton’s higher tax-rates. South Jersey residents who work in Philadelphia are also likely to pay higher income taxes – to Harrisburg. About 125,000 Pennsylvania residents commute to New Jersey, and another 125,000 make the reverse trip, according to Census Bureau estimates.