The credit a taxpayer is allowed is limited to
the lesser of the proportional credit limitation
amount, or the actual tax paid to the other jurisdiction.
The “proportional credit limitation
amount” represents the amount of New Jersey
income tax that would have been imposed if the
income earned in the other jurisdiction (Philadelphia) had been
earned in New Jersey. In general, if the other jurisdiction’s effective
tax rate is higher than New Jersey’s, the credit
will be limited to the proportional credit limitation
amount.
http://www.state.nj.us/treasury/taxation/pdf/pubs/tgi-ee/git3w.pdf
