The reason your New Jersey wages are larger than your federal wages is because New Jersey taxes several items that are excluded for federal and New York State purposes. Consequently, the state wages on your W-2, Box 16, are higher than Box 1.
Some of the most common ways New Jersey does not follow federal tax law are:
- New Jersey does not exclude from tax any cafeteria plans, such as Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs) and Dependent Care Assistance Plan (DCAP).
- New Jersey does not exclude salary deferrals to retirement plans (other than to 401(k) plans).
The above items are excluded from federal wages, but are added back to New Jersey state wages. This makes the New Jersey wages higher than the federal wages and the New York wages.
@jlin22
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