The tax reciprocal agreement between Pennsylvania and New Jersey will remain in place. New Jersey has chosen not to terminate the 40-year-old agreement. Pennsylvania residents who work in New Jersey will continue to be subject to the Pennsylvania personal income tax and have Pennsylvania personal income tax withheld from compensation received in New Jersey.
Pennsylvania employers will continue to withhold New Jersey personal income tax on behalf of their New Jersey resident employees, and remit that tax to the State of New Jersey. The Pennsylvania Department of Revenue recently shared information with employers to help them prepare employees for the termination of the agreement. Since the agreement will continue, the state is advising employers to disregard that communication. (Pennsylvania Department of Revenue, http://www.revenue.pa.gov/Pages/default.aspx#.WDW5e1jnaM9, November 2016.)
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