Live in New Jersey, Work in North Dakota: Which State Taxes Your Paycheck?
Answer
North Dakota withholds and New Jersey credits. Without an agreement between them, both states are entitled to tax income earned in North Dakota by a New Jersey resident. The mechanism that stops you paying twice is the credit on the New Jersey resident return, which is why the North Dakota return has to be completed first.
Last verified
Two states can lawfully tax the same wages: North Dakota because the work happened there, New Jersey because you live there. Nothing prevents the overlap in advance — it is unwound afterwards, on the New Jersey return, through the credit for taxes paid to another state.
A New Jersey resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule NJ-COJ. The credit is capped at the New Jersey 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 · North DakotaForm ND-1 with Schedule ND-1NR
File the North Dakota nonresident return FIRST — you need the North Dakota tax figure before you can complete New Jersey.
- 2Resident return · New JerseySchedule NJ-COJ
File a New Jersey resident return reporting all income, then claim the credit for tax paid to North Dakota. The credit is capped at what New Jersey would have charged on that same income, so if North Dakota taxes it at a higher rate the difference is not refunded.
The two states, side by side
| New Jersey | North Dakota | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | 1 (Form NJ-165) | 2 (Form NDW-R) |
| Convenience rule | Only against convenience-rule states | No |
| Nonresident return | Form NJ-1040NR | Form ND-1 with Schedule ND-1NR |
| Credit for other-state tax | Schedule NJ-COJ | Schedule ND-1CR |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | No |
| Revenue department | New Jersey Division of Taxation | North Dakota Office of State Tax Commissioner |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in North Dakota and working in New Jersey gives:Both states — credit offsets the double tax.
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.
- Remote worker: New Jersey → North DakotaHome state only
- 1099 contractor: New Jersey → North DakotaHome state, plus the client state if you work there
- Moved mid-year: New Jersey → North DakotaTwo part-year returns
Other New Jersey pairs
Questions people actually ask
I live in New Jersey and work in North Dakota. Which state takes the tax out of my paycheck?
North Dakota withholds and New Jersey credits. Without an agreement between them, both states are entitled to tax income earned in North Dakota by a New Jersey resident. The mechanism that stops you paying twice is the credit on the New Jersey resident return, which is why the North Dakota return has to be completed first.
Which state should my employer be withholding for?
North Dakota. The wages are sourced to North Dakota, so North Dakota withholding is correct and there is no New Jersey withholding to set up.
Will I end up paying tax twice on the same income?
Not twice over, but you will pay the higher of the two rates. New Jersey gives residents a credit for tax paid to North Dakota on the same income, claimed on Schedule NJ-COJ. The credit is capped at the New Jersey tax on that income, so if North Dakota taxes it more heavily the excess is not refunded by either state.
How current is this?
The New Jersey and North Dakota rules on this page were last checked against New Jersey Division of Taxation and North Dakota Office of State Tax Commissioner 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
- North Dakota Office of State Tax Commissioner — individual income taxaccessed 2026-08-07