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State tax filing
You have to file two state tax returns, a New York nonresident tax return and a New Jersey resident tax return. You have to pay New York tax on the income you earn in New York. Since you live in New Jersey, all your income is subject New Jersey tax, no matter where the income is from. But you will get a credit on your New Jersey tax return for part or all of the tax that you pay to New York.
Both the New York and New Jersey tax returns use your total federal income as a starting point. The adjustments are made further down on the tax return. The New York nonresident tax return will calculate tax on your total income, then apply an adjustment based on the percentage of your income that is from New York. Prepare your New York nonresident tax return first, then your New Jersey resident tax return, to make sure that the credit on your New Jersey tax return is calculated correctly.