Comparison•2025 Tax Year•Last verified: January 2026
New York vs New Jersey: Side Hustle Tax Comparison 2025
Compare New York and New Jersey taxes for freelancers and gig workers. See how these neighboring states compare for your side hustle income.
New York and New Jersey are neighboring states with millions of residents who commute across state lines daily. For side hustlers in the tri-state area, understanding the tax implications of where you live—versus where you work—is essential.
Both states have progressive income taxes, but New York's rates are higher, especially when you add NYC's additional tax. New Jersey's top rate is also high at 10.75%, but it kicks in at a much higher income level. This guide breaks down which state is better for your side hustle.
**Why This Comparison Matters:**
The NY/NJ tax question affects millions of people:
- **Cross-border commuters**: Hundreds of thousands live in NJ and work in NYC (or vice versa)
- **Remote work changes**: Post-COVID, many can now choose where to live without changing jobs
- **NYC tax escape**: Moving to NJ eliminates NYC's 3.876% additional tax while staying in the metro area
- **Similar lifestyle**: Access to NYC amenities from NJ suburbs
For side hustlers specifically, living in New Jersey while serving NYC clients can mean significant tax savings—especially escaping NYC's city tax.
Side-by-Side Tax Comparison
| Metric | New York | New Jersey |
|---|---|---|
| State Income Tax Rate | 4% - 10.9% (progressive) | 1.4% - 10.75% (progressive) |
| NYC/City Additional Tax | 3.078% - 3.876% | None |
| Common Rate for Side Hustlers | 5.85% - 6.85% (+NYC) | 5.525% - 6.37% |
| Top Rate Kicks In At | $25 million | $1 million |
| Federal SE Tax | 15.3% | 15.3% |
| Est. Tax on $18K Side Hustle (NYC)* | ~$8,436 | ~$7,500 |
| Annual Savings (NJ vs NYC)* | — | ~$936 |
| Property Tax (Avg Rate) | 1.40% | 2.23% |
| Sales Tax | 8.52% | 6.625% |
*Assumes single filer with $60,000 W-2 income + $15,000 net side hustle income. Actual taxes vary based on deductions, filing status, and total income.
New York Analysis
**New York Tax Analysis for Side Hustlers**
New York's state tax combined with NYC's city tax creates one of the highest income tax burdens in the country.
**Key New York Tax Facts (2025):**
- **State Tax Type**: Progressive (9 brackets)
- **State Rate Range**: 4% to 10.9%
- **NYC Additional Tax**: 3.078% to 3.876%
- **Combined NYC Rate**: Can exceed 14%
- **Filing Threshold**: $4,000 income
**Example**: NYC resident with $70,000 W-2 job and $18,000 from side hustle income:
- Federal SE Tax: ~$2,545
- Federal Income Tax on side income: ~$3,960
- NY State Tax: ~$1,233
- NYC Tax: ~$698
- **Total Tax on Side Hustle: ~$8,436** (46.9% effective rate)
The NYC additional tax is the killer for city residents—it adds 3-4% on top of already-high state rates.
New Jersey Analysis
**New Jersey Tax Analysis for Side Hustlers**
New Jersey has high taxes too, but no city-level income tax and a more gradual bracket structure.
**Key New Jersey Tax Facts (2025):**
- **Tax Type**: Progressive (7 brackets)
- **Rate Range**: 1.4% to 10.75%
- **Common Side Hustler Rate**: 5.525% to 6.37%
- **No City Tax**: NJ cities don't add income tax
- **Filing Threshold**: $10,000 income
**Example**: NJ resident with $70,000 W-2 job and $18,000 from side hustle income:
- Federal SE Tax: ~$2,545
- Federal Income Tax on side income: ~$3,960
- NJ State Tax: ~$995
- **Total Tax on Side Hustle: ~$7,500** (41.7% effective rate)
**Savings vs NYC: ~$936/year** on $18,000 of side hustle income.
New Jersey's top rate (10.75%) is similar to New York's (10.9%), but it only applies to income over $1 million. Most side hustlers stay in lower brackets.
Calculate Your Side Hustle Taxes
Use our calculator to see exactly what you'd owe in each state. Try entering your numbers, then switch between New York and New Jersey to compare.
Which State Is Right for Your Side Hustle?
**New York (NYC) May Be Better If You:**
- Need to be physically in Manhattan frequently
- Have rent-stabilized housing in NYC
- Work in industries where NYC presence is essential
- Value NYC's walkability and public transit
- Already have deep NYC roots and network
**New Jersey May Be Better If You:**
- Want to escape NYC's city income tax
- Can work remotely or commute occasionally
- Want more space for the same or less money
- Have a family and want suburban amenities
- Don't mind the commute for lower taxes
**Important Considerations:**
1. **NYC tax is the key difference**: The ~4% NYC tax is what makes NJ compelling. If you live upstate NY (no NYC tax), the comparison changes.
2. **Property taxes are brutal in NJ**: New Jersey has the highest property taxes in the nation (2.23% average). If buying a home, this can offset income tax savings.
3. **Commuting costs**: NJ Transit monthly pass, PATH, or driving costs add up. Factor this into your comparison.
4. **Convenience of employer rule**: If you work remotely for a NY-based employer from NJ, NY may still tax that income. True freelancers with diverse clients don't have this issue.
5. **Sales tax favors NJ**: NJ's 6.625% sales tax is lower than NYC's 8.52%, providing additional savings on purchases.
Frequently Asked Questions
How much will I save moving from NYC to New Jersey?
The primary savings come from escaping NYC's city income tax (3-4%). On $18,000 of net side hustle income, a typical side hustler could save around $700-$1,000 per year. However, if you're buying a home, NJ's much higher property taxes may offset these savings.
Do I have to pay NY taxes if I live in NJ but have NYC clients?
If you're a freelancer living and working in New Jersey, you pay NJ taxes regardless of where your clients are located. You don't owe NY tax just because your clients are in NYC—you owe tax where YOU perform the work. However, if you physically travel to NYC to work, those days may be taxable by NY.
What about the "convenience of employer" rule?
This NY rule mainly affects W-2 employees working remotely for NY employers—NY may tax their full salary even if they work from NJ. For true freelancers with multiple clients, this rule doesn't apply. Your freelance income is taxed where you perform the work (your home state).
Related Comparisons
Sources
- • New York State Department of Taxation and Finance - 2025 Tax Rates
- • NYC Department of Finance - City Income Tax Rates
- • New Jersey Division of Taxation - 2025 Tax Rates
- • IRS Publication 334 - Tax Guide for Small Business
- • Tax Foundation - State Tax Data 2025