I have 1099 income. I lived in PA first 6 months of year... I made 100k. Then I moved to NJ and made 50k. Does the first 100k I make in PA count towards determining my marginal tax rate/bracket in NJ? Or is the counter reset when I move to NJ?
Yes. The first $100k does count towards determining your marginal tax rate/bracket in New Jersey.
Like most states, NJ will use your total income for your base tax rate, but you will only be taxed on $50k (but a higher rate than if you only earned $50k for the whole year).
Suppose the tax on $150,000 is 10% or $15,000. Since you earned 33% ($50k/$150k) of your income in NJ, your tax would be 33% of $15,000, or $5,000.
Pennsylvania has a flat tax so there is not upcharge.
Let's change the scenario. Instead of PA, I live in CT and make first 100k there. Are you saying that my $150,000 will be taxed at the highest rate in both states? I don't get a marginal tax rate for first 150k?
NJ will tax 50k at a flat 6.37%.
CT will tax 100k at flat 6%.
Yes. Connecticut starts its state tax calculation with federal AGI, then makes state-specific additions and subtractions so you will pay the tax rate based on federal AGI +/- some minor adjustments for state law.
The rule generally applies to any state without a flat tax rate.