When you file your tax returns at the end of the year, you will have to file a New York nonresident return and a New Jersey resident return. The income that you earn in New York is subject to New York tax because you worked there, and to New Jersey tax because you live there. But you will get a credit on your New Jersey tax return for part of the tax that you pay to New York. Since the New York tax rates are higher, the credit will essentially eliminate the New Jersey tax on your New York income. So you will end up paying most of your state tax to New York, and very little, if any, to New Jersey (unless you have significant other income besides your job in New York).
