New Jersey is officially back on offense against states like New York that maintain an aggressive approach to taxing out-of-state residents who work from home.
Gov. Phil Murphy on Friday signed a law that changes state income-tax policy for individuals and sets up a new tax-credit program for businesses that will be used to entice out-of-state companies to create new locations in New Jersey.
The same law also allows for new tax breaks to be offered to individual taxpayers who mount a successful legal challenge against states like New York that assert they have the right to tax the income of people working from home in another state if the company they work for is based in New York.
The law’s adoption comes as employees in many industries are now working from home permanently, or at least on a hybrid basis, under practices initially put in place as public-health measures during the worst years of the COVID-19 pandemic.
While such work settings have dramatically reshaped the modern workplace, they can also have major implications for state budgets, with potentially billions of dollars in income-tax revenue hanging in the balance.
Meanwhile, the decision to fight back legally against New York comes as officials there are moving ahead with a plan to charge a new “congestion toll” on motorists who enter Manhattan below 60th Street.
Murphy and other elected officials in New Jersey have been highly critical of the New York tolling plan, arguing it would be unfair...
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