Yes, it is taxable in NJ. See these:
http://www.koscpa.com/newsletter-article/state-tax-consequences-telecommuting/
http://www.journalofaccountancy.com/issues/2009/jun/20091371.html
http://www.cheatsheet.com/personal-finance/why-some-telecommuters-are-facing-double-taxation.html/?a...
