Live in Delaware, Work Remotely for a New Jersey Employer: Who Taxes You?
Answer
Remote does not mean untaxed here. New Jersey applies a convenience-of-the-employer test, so unless your employer can show the remote arrangement is a necessity rather than your preference, New Jersey taxes the income. Delaware taxes it too as resident income and gives a credit against its own tax.
Last verified
A handful of states refuse to accept the ordinary sourcing rule for their own employers' remote staff. New Jersey is one of them, and its convenience-of-the-employer rule is the reason this page does not end with "only your home state taxes you".
New Jersey adopted a convenience-of-the-employer rule in 2023, but only as a mirror: the Division of Taxation states that it applies solely to employees who are residents of states that impose a similar test — naming Delaware, Nebraska and New York. A resident of any other state working remotely for a New Jersey employer is not reached by it.
The rule is not an administrative preference. New Jersey applies it under P.L. 2023, c.125 (N.J.S.A. 54A:5-8), retroactive to 1 January 2023, and the burden of showing that remote work is an employer necessity rather than an employee convenience falls on you and your employer, not on New Jersey Division of Taxation.
A Delaware resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule I (Form PIT-RES). The credit is capped at the Delaware tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
What you file
- 1Nonresident return · New JerseyForm NJ-1040NR
File the New Jersey nonresident return FIRST — you need the New Jersey tax figure before you can complete Delaware.
- 2Resident return · DelawareSchedule I (Form PIT-RES)
File a Delaware resident return reporting all income, then claim the credit for tax paid to New Jersey. The credit is capped at what Delaware would have charged on that same income, so if New Jersey taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Delaware | New Jersey | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | None | 1 (Form NJ-165) |
| Convenience rule | Yes — general rule | Only against convenience-rule states |
| Nonresident return | Form PIT-NON | Form NJ-1040NR |
| Credit for other-state tax | Schedule I (Form PIT-RES) | Schedule NJ-COJ |
| Nonresident safe harbour | None published | None published |
| Local income tax | Yes | No |
| Revenue department | Delaware Division of Revenue | New Jersey Division of Taxation |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in New Jersey and working in Delaware gives:Convenience-of-the-employer rule — both states tax you.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- W-2 commuter: Delaware → New JerseyBoth states — credit offsets the double tax
- 1099 contractor: Delaware → New JerseyHome state, plus the client state if you work there
- Moved mid-year: Delaware → New JerseyTwo part-year returns
Other Delaware pairs
Questions people actually ask
I live in Delaware and work remotely for a New Jersey employer. Which state do I pay?
Remote does not mean untaxed here. New Jersey applies a convenience-of-the-employer test, so unless your employer can show the remote arrangement is a necessity rather than your preference, New Jersey taxes the income. Delaware taxes it too as resident income and gives a credit against its own tax.
Which state should my employer be withholding for?
Both, potentially — and that is the problem. New Jersey expects withholding because it claims the income, while Delaware taxes you as a resident. Many employers withhold only for New Jersey, which leaves a Delaware balance due at filing unless you make estimated payments during the year.
Will I end up paying tax twice on the same income?
Not twice over, but you will pay the higher of the two rates. Delaware gives residents a credit for tax paid to New Jersey on the same income, claimed on Schedule I (Form PIT-RES). The credit is capped at the Delaware tax on that income, so if New Jersey taxes it more heavily the excess is not refunded by either state.
How current is this?
The Delaware and New Jersey rules on this page were last checked against Delaware Division of Revenue and New Jersey Division of Taxation on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- Delaware Division of Revenue — individual income taxaccessed 2026-08-07
- New Jersey Division of Taxation — individual income taxaccessed 2026-08-07
- New Jersey Division of Taxation — Convenience of the Employer Ruleaccessed 2026-08-07