"...I and my my wife own our home here in NJ..."
"my primary home address with MA employer was in NJ "
If your domicile - your main, permanent home to which you return after temporary absences - is in New Jersey, then NJ can tax ALL your income, regardless of where you earn it. NJ will give you a credit for taxes you pay to other states, so that you won't be double taxed.
So it sounds like NJ is correct in what it is telling you.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
