Live in New Jersey, Work Remotely for a Indiana Employer: Who Taxes You?
Answer
New Jersey gets all of it. Because Indiana does not tax wage income, no Indiana withholding exists and no Indiana return is required — but New Jersey taxes residents on worldwide income, so every dollar earned in Indiana still belongs on your New Jersey resident return.
Last verified
The instinct that working in a no-tax state means paying no tax is the single most expensive misunderstanding in this niche. Indiana takes nothing, but New Jersey still taxes residents on income earned anywhere, so the full amount lands on your New Jersey return.
Indiana also has a layer below the state one, and it is the layer that survives every agreement: Every Indiana county levies its own income tax, and the reciprocal agreements do not cover it. A resident of a reciprocal state who works in Indiana still pays Indiana county tax on those wages.
What you file
- 1Resident return · New Jersey
File a New Jersey resident return reporting all of your income.
The two states, side by side
| New Jersey | Indiana | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | 1 (Form NJ-165) | 5 (Form WH-47) |
| Convenience rule | Only against convenience-rule states | No |
| Nonresident return | Form NJ-1040NR | Form IT-40PNR |
| Credit for other-state tax | Schedule NJ-COJ | Schedule 6 (Form IT-40PNR) |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | Yes |
| Revenue department | New Jersey Division of Taxation | Indiana Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Indiana and working in New Jersey gives:Home state only.
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: New Jersey → IndianaBoth states — credit offsets the double tax
- 1099 contractor: New Jersey → IndianaHome state, plus the client state if you work there
- Moved mid-year: New Jersey → IndianaTwo part-year returns
Other New Jersey pairs
Questions people actually ask
I live in New Jersey and work remotely for a Indiana employer. Which state do I pay?
New Jersey gets all of it. Because Indiana does not tax wage income, no Indiana withholding exists and no Indiana return is required — but New Jersey taxes residents on worldwide income, so every dollar earned in Indiana still belongs on your New Jersey resident return.
Which state should my employer be withholding for?
New Jersey. Your employer should withhold New Jersey tax rather than Indiana tax on these wages. If a Indiana line is showing on your pay stub, raise it with payroll now rather than at filing time.
Does my Indiana employer's location alone create a Indiana tax obligation?
No. Indiana sources wages to the place where the work is physically performed, and it does not apply a convenience-of-the-employer rule that would override that. Days you actually spend working inside Indiana are a different matter — those are Indiana-source income and can require a nonresident return.
How current is this?
The New Jersey and Indiana rules on this page were last checked against New Jersey Division of Taxation and Indiana Department of Revenue 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.
- New Jersey Division of Taxation — individual income taxaccessed 2026-08-07
- New Jersey Division of Taxation — Convenience of the Employer Ruleaccessed 2026-08-07
- Indiana Department of Revenue — individual income taxaccessed 2026-08-07