If you live in Bucks County or the Princeton area and work in New York, you pay New York State income tax on the wages you earn there, you stop paying New York City income tax, and your home state gives you a credit so the same wages are not fully taxed twice. The details differ between Pennsylvania and New Jersey, and property and transfer taxes differ even more. This guide walks through each piece so you can compare the two sides of the river with your accountant.
New York State: you still file there
New York taxes nonresidents on their New York-source income, which includes wages for work performed in New York. Commuters file Form IT-203, the nonresident return.
The rule that catches hybrid workers is New York’s convenience of the employer test. If your primary office is in New York, days you work from home in Pennsylvania or New Jersey for your own convenience still count as New York workdays. The main exception is a home office your employer has set up as a bona fide employer office, which has its own test. In practice, a hybrid worker whose desk is in Manhattan generally owes New York tax on all of their wages.
New York City: this one goes away
New York City’s personal income tax applies only to city residents. The city’s tax on commuters who live elsewhere was repealed in 1999. When you move from the five boroughs to Bucks County or the Princeton area, you stop owing city income tax, which is one reason the move can improve a household’s finances even before housing costs.
If you live in Pennsylvania
- Pennsylvania’s income tax is a flat 3.07 percent. It applies to your wages, including those earned in New York.
- You get a credit for New York tax on the same income, claimed on Schedule G-L with a copy of your New York return. The credit is limited to the Pennsylvania tax on that income. Because New York’s rate on most wages is higher than 3.07 percent, the credit generally covers the Pennsylvania tax on New York wages.
- Local earned income tax still applies. Bucks County municipalities and school districts levy a local earned income tax; in New Hope, for example, it is 1 percent combined. New York tax is credited against Pennsylvania’s state tax first, and only what is left over can be credited against the local tax, up to the local tax on that income. Keystone Collections Group, the Bucks County collector, describes this order. For many commuters the leftover New York tax covers much or all of the local tax, but it depends on income and the local rate.
- Retirement: Pennsylvania does not tax most retirement income once you qualify, and Social Security is not taxable for Pennsylvania purposes. That matters for buyers planning to stay after they stop commuting.
If you live in New Jersey
- New Jersey’s income tax is graduated, from 1.4 percent up to 10.75 percent on income over $1 million, with brackets of 6.37 percent and 8.97 percent in between.
- You get a credit for New York tax on the same income, claimed on Schedule NJ-COJ. The credit cannot exceed the New Jersey tax on that income, so where New Jersey’s rate on your income is higher than New York’s, you pay the difference to New Jersey.
- No local income tax applies in Princeton, West Windsor, Pennington, or Lambertville.
- Retirement: New Jersey’s pension exclusion applies at age 62 or older with total income up to $150,000, covering up to $100,000 for joint filers.
Property taxes: the biggest difference
| Area | Median property tax paid | Median home value |
|---|---|---|
| Bucks County, PA | $5,826 | $445,700 |
| Mercer County, NJ (Princeton area) | $8,909 | $377,700 |
| Hunterdon County, NJ (Lambertville) | $10,000 or more | $517,200 |
Source: U.S. Census Bureau, American Community Survey, 2020 to 2024. Hunterdon’s figure is capped at $10,000 in the survey, so the true median is higher.
New Jersey also publishes average residential tax bills by town. In 2025, the average bill was $23,373 in Princeton, $16,604 in West Windsor, $16,171 in Pennington, $14,873 in Hopewell Township, and $10,009 in Lambertville. On the Pennsylvania side, Bucks County taxes depend on the township and school district, and assessments use an older base year, so the best comparison is the actual tax bill on each home you consider.
Transfer taxes when you buy and sell
| Pennsylvania (Bucks County) | New Jersey | |
|---|---|---|
| Main tax | 2 percent of the price: 1 percent state plus 1 percent local | Realty transfer fee, graduated, paid by the seller |
| Who pays | Customarily split between buyer and seller, but negotiable | Seller |
| Sales over $1 million | No extra tax | Additional fee paid by the seller, 1 percent of the full price from $1 million to $2 million, rising to 3.5 percent above $3.5 million |
New Jersey’s over-$1 million fee, often called the mansion tax, was paid by buyers until July 10, 2025, when a new law moved it to sellers and made it graduated. On a $2.75 million sale, for example, the seller now owes 2.5 percent, or $68,750, on top of the regular transfer fee. Buyers moving from New York who expect to sell a New Jersey home someday should know this cost is now theirs on the way out.
The Pennsylvania realty transfer tax guide covers the Pennsylvania side in more detail.
Putting it together
- Income tax for a New York commuter usually ends up close to New York’s rate on those wages, wherever you live, once the credits are applied. The bigger swing comes from leaving New York City’s own income tax behind.
- Property tax is usually the largest annual difference between the Pennsylvania and New Jersey sides of the river.
- Transfer taxes favor Pennsylvania buyers on the way in only slightly, but New Jersey sellers of homes over $1 million now pay more on the way out.
For the commute itself, see the guide to the NYC commute from Bucks County and Princeton, and for the full decision, the guide to moving from New York City to Bucks County or Princeton.
Working with Karen
Karen Langsfeld is a REALTOR® with Berkshire Hathaway HomeServices Fox & Roach, licensed in Pennsylvania and New Jersey. For buyers weighing both sides of the river, she pulls the actual tax bill for each home and puts Pennsylvania and New Jersey options side by side, so the comparison you take to your accountant uses real numbers. Learn more about moving from New York.
Contact Karen at (215) 495-2914 or through the contact page.
This guide is general information, not tax or legal advice. Tax results depend on your income, work arrangement, and household; confirm them with your accountant. Sources: New York State Department of Taxation and Finance, nonresident FAQs and TSB-M-06(5)I; City of New York v. State of New York (2000); Pennsylvania Department of Revenue, personal income tax and Schedule G-L; Keystone Collections Group; New Hope Borough; New Jersey Division of Taxation, Schedule NJ-COJ, tax rate schedules, 2025 average residential tax statistics, and the July 2, 2025 graduated percent fee notice; U.S. Census Bureau, American Community Survey 2020-2024.