--- title: "New Jersey Tax Reciprocity: Form NJ-165 for PA Workers" description: "Live in PA and work in New Jersey? File Form NJ-165 with your employer to stop New Jersey withholding. Conditions, where to file and official links." url: "https://mcc-solutionsnj.com/bookkeeping/state-tax-reciprocity-new-jersey" --- Reciprocity · New Jersey # New Jersey income tax reciprocity Who can skip the area withholding, the certificate the employer needs, and what New Jersey Division of Taxation says about commuters and remote days. [![Intuit ProAdvisor Gold tier badge](/img/credentials/intuit-proadvisor-gold.png)](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77)Gold tier in Intuit's ProAdvisor program. [See my Intuit listing](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77) Keeping your own books? Tallyfinch does invoices, bank import and reports on your computer. [See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software) **Short answer.** The area has reciprocal agreements with Pennsylvania. A resident of one of them who works here gives the employer Form NJ-165 and pays income tax on covered wages at home. ## New Jersey at a glance Income tax on wages Yes Agreements named Pennsylvania What's covered Compensation only. The agreement doesn't cover Philadelphia's wage tax. Employee form Form NJ-165, Employee's Certificate of Nonresidence in New Jersey Nonresidents Withheld from unless an agreement or exemption applies Resident credit Stated Convenience rule Stated Agency New Jersey Division of Taxation ## New Jersey's agreement partners | Partner | Other side | Their form | Conditions | Check | | --- | --- | --- | --- | --- | | [Pennsylvania](/bookkeeping/state-tax-reciprocity-pennsylvania) | Names this state too | REV-419 | The agreement covers compensation only. It "does not apply to income or wage tax imposed and collected by the City of Philadelphia." | [Live there, work here](/bookkeeping/live-in-one-state-work-in-another-checker?home=pa&work=nj) | ## The form: NJ-165 Employee's Certificate of Nonresidence in the area. A Pennsylvania resident working in the area files it with the employer to stop the area withholding. Want payroll set up right? [Payroll and leave tracking for New Jersey employers](/bookkeeping/payroll-and-leave-tracking-nj), or [employer registration in New Jersey](/bookkeeping/out-of-state-employer-registration). "file an Employee's Certificate of Nonresidence in New Jersey (Form NJ-165)" ## In the official words "Compensation paid to Pennsylvania residents employed in New Jersey is not subject to New Jersey Income Tax." "You must withhold New Jersey tax from compensation paid to nonresident employees working in New Jersey." ## Credit for tax paid to other states A New Jersey resident with income from sources outside the area may get a credit on Schedule NJ-COJ. Under the reciprocal agreement, "you cannot claim a credit on Schedule NJ-COJ for taxes paid to Pennsylvania on those earnings"; Philadelphia wage tax can still count. ## Remote work and the convenience rule Since tax year 2023, a nonresident's pay from a area employer is sourced to the area when the work is done elsewhere for the employee's own convenience, but only for residents of states that impose a similar test. "The new law only applies to employees who are residents of states that also impose a similar test." ## Days and thresholds An employer doesn't have to withhold the area tax from a area resident who works totally outside the area subject to the other state's withholding, and has other-state withholding at least equal to the area's. ## Worth knowing - A Pennsylvania resident who had the area tax withheld "must file a area nonresident return to get a refund" and enclose a signed statement; a area resident with Pennsylvania tax withheld must file a Pennsylvania return to get a refund. - A New Jersey resident working in Pennsylvania gives the Pennsylvania employer Form REV-419EX, Employee's Nonwithholding Application Certificate, per the Division's agreement page. The area and New York have no reciprocal agreement. For the day count, New York's telecommuting rule and the Schedule NJ-COJ credit, see our guide for a [New Jersey resident with a New York job](/bookkeeping/guides/nj-resident-new-york-job-two-state-tax-guide) and the [NJ-NY Two-State Worker Kit](/toolkits/nj-ny-two-state-worker-kit). ## Official sources - [NJ Division of Taxation: PA/NJ Reciprocal Income Tax Agreement](https://nj.gov/treasury/taxation/njit25.shtml) (checked November 2026) - [NJ Division of Taxation: NJ-WT, New Jersey Income Tax Withholding Instructions](https://www.nj.gov/treasury/taxation/pdf/current/njwt.pdf) (checked November 2026) - [NJ Division of Taxation: Credit for Taxes Paid to Other Jurisdictions](https://www.nj.gov/treasury/taxation/njit14.shtml) (checked November 2026) - [NJ Division of Taxation: Convenience of the Employer Sourcing Rule Enacted for Gross Income Tax](https://www.nj.gov/treasury/taxation/conveniencerule.shtml) (checked November 2026) General information, not tax advice. Checked November 2026 against the official pages listed above. Agreements, forms and thresholds change, and your own facts (where you lived, where you worked each day, other income) decide the answer; check with a tax professional for your situation. MCC Solutions is not a CPA firm and is not affiliated with any tax agency. ## Questions about New Jersey **Which states have a reciprocal agreement with New Jersey?** Pennsylvania. The area's page puts it this way: "Compensation paid to Pennsylvania residents employed in the area is not subject to New Jersey Income Tax." **Which form does a nonresident give a New Jersey employer?** Form NJ-165, Employee's Certificate of Nonresidence in the area. A Pennsylvania resident working in the area files it with the employer to stop the area withholding. **Are there conditions on the New Jersey agreements?** Pennsylvania: The agreement covers compensation only. It "does not apply to income or wage tax imposed and collected by the City of Philadelphia." **Does New Jersey withhold from nonresidents from other states?** Yes, unless an agreement or exemption applies. The official wording: "You must withhold the area tax from compensation paid to nonresident employees working in the area." **Do New Jersey residents get credit for tax paid to another state?** A New Jersey resident with income from sources outside the area may get a credit on Schedule NJ-COJ. Under the reciprocal agreement, "you cannot claim a credit on Schedule NJ-COJ for taxes paid to Pennsylvania on those earnings"; Philadelphia wage tax can still count. **Does New Jersey have a convenience of the employer rule?** Since tax year 2023, a nonresident's pay from a area employer is sourced to the area when the work is done elsewhere for the employee's own convenience, but only for residents of states that impose a similar test. The official wording: "The new law only applies to employees who are residents of states that also impose a similar test." All states: [reciprocity agreements by state](/bookkeeping/state-tax-reciprocity-agreements) · [Live in one state, work in another](/bookkeeping/live-in-one-state-work-in-another-checker) · [Minnesota](/bookkeeping/state-tax-reciprocity-minnesota) · [North Dakota](/bookkeeping/state-tax-reciprocity-north-dakota) Working across a state line? ## Multi-State Worker Tax Organizer Log every workday by state, total the days, and flag whether your home and work states have an agreement, with a area checklist of the forms to give your employer. [Get the organizer ($15)](/toolkits/multi-state-worker-tax-organizer) [Free sample](/toolkits/multi-state-worker-tax-organizer#free-starter)14-day full refund ## Related - [Form NJ-165 for Pennsylvania residents](/bookkeeping/form-nj-165) Tallyfinch ### Books you keep on your own computer Tallyfinch does invoices, bills, bank import, reconciliation and the main reports, in a file you own. $99 once, then $5 a month for updates; the app keeps working if you stop the plan. It does not do payroll or sales tax filing. The free download records up to 60 entries. [See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software) [Download it free](/tools/pro/trial/mccBooks) [Compare the three apps](/software) ## Payroll in more than one state? [See bookkeeping services](/bookkeeping/)[Call (908) 444-6373](tel:+19084446373)