On November 22, 2016, Governor Christie changed course and said he would not pull the agreement on Pennsylvania`s reciprocal income tax in New Jersey. According to a statement, health care reforms would generate $200 million in savings next year, allowing Governor Christie and his government to “save” the agreement. Pennsylvania requires proof that taxes were paid to the other state. You must print the return of the AP with a copy of the return of the state of New Jersey, the W-2 (s) with the AP income and a statement in which you reside in a reciprocal state, and send it by email. To be exempt from future PA deductions, submit the REV-419 form to your employer. New Jersey Gov. Chris Christie announced in September 2016 that the agreement would be repealed on January 1, 2017. New Jersey faced a budget deficit of $250 million, and that would be $180 million net for the state. The denunciation of the mutual agreement would affect about 125,000 people who commute between New Jersey and Pennsylvania, another 125,000 who commute in reverse, and all the companies that employ these people. After much violence, the agreement is maintained. We understand that some people question the real motivations for the decision not to take anything away from the tax treaty and ultimately maintain it, but our role is not to participate in political debates.
Our task is to present information so that you make the best decisions possible. Unfortunately, there is no doubt that some employers and subcontractors have wasted time and resources preparing for policy change. There is no doubt that while the change generates additional revenue for New Jersey, it would have had a negative impact on many businesses and commuters between states. But the agreement will be maintained for the foreseeable future. This is particularly advantageous for Pennsylvania residents, who pay a flat-rate national income tax rate of 3.07 percent, compared to New Jersey`s progressive tax, which ranges from 1.4 percent to 8.97 percent for those earning more than $500,000. New Jersey residents, who are in the lowest income tax class and work in Pennsylvania, also pay less public taxes. The agreement also allows New Jersey residents to obtain an income tax credit from Philadelphia City. New Jersey and Pennsylvania have a mutual agreement. Compensation for New Jersey residents who work in Pennsylvania is not subject to income tax in Pennsylvania.