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As a New Jersey resident who works in New York City, you are generally required to pay taxes in both New York State and New Jersey. Since you work in New York City, you'll need to file a nonresident New York State tax return to report your income earned in NYC. You'll also be required to file a resident state income tax return in New Jersey because you live there, and this includes reporting all your income from all sources, including your NYC job. However, to prevent double taxation, New Jersey offers a credit for taxes paid to other jurisdictions. This means that you can claim a credit on your New Jersey tax return for taxes you paid to New York on the income you earned there. The credit helps to offset the taxes you paid to New York so you're not paying full taxes to both states on the same income. While this doesn't eliminate your tax liability to New York, it can help reduce your overall tax burden.