Caj11 - Good point, I probably should have considered how NYC employment affects the tax burden, but overlooked it -- probably because I work in New Jersey.

Like mfadam, I was surprised that the tax advantage of living in New Jersey was as small as it turned out to be.

I used to live in Washington Heights but left in order to avoid paying NYS and NYC income taxes, in addition to the ever-rising tolls on the GWB as I returned from work.

When I looked at taxes at the time, the difference seemed astronomical. For me, NYS taxes were double what they are in NJ, and the NYC income tax was another $2K. The apparent difference in taxes came out to 5% of my gross income.

Because I rent rather than own, the property tax burden in NJ was less visible to me. But if I assume that 17% of my annual rent is indirect payment of property taxes, then the difference in the tax burden between NYC and JC falls to 1% of my gross income.

So: although I thought I was saving money due to lower taxes, it looks like most of my savings are simply due to lower rents. Had I adjusted rent for taxes, I would have realized this.

If you live in JC but work in NYC, you're going to pay the New York State (but not the NYC) income taxes anyway on the income from your job. Then all of your income (your job and investment income) is subject to New Jersey taxes, but any New York taxes is credited against that. Although, living in New Jersey instead of one of the five boroughs, you do escape the New York City tax on income, which is up to 3.876%, though it would be a little lower for most of us.

So, living in New Jersey doesn't shield you from New York State income taxes if your work in NYC.

if your math is right, there are way less tax savings than I would have guessed living in JC. Things like PATH fees hurt too, but if you have a car JC is way cheaper for garage fees.

Interesting, thanks for putting up...

In the spirit of this topic, from 2010

High-Rise, or House With Yard?
By TARA SIEGEL BERNARD

The question starts to hang in the air sometime after the children arrive, and the apartment in the city begins to feel a little tight: Should we consider moving to a house in the suburbs?

But that would mean leaving friends behind, along with easy access to work, the theater, great ethnic restaurants and just the general stimulation of urban living. The prospect of more space, however, is tempting ? a bedroom for each child, a lawn to stretch out on. And there?s the luxury of simply pulling into a driveway and a reputable public school just around the corner.

Which to choose?

Ultimately, deciding which lifestyle best suits you ? and where to buy ? comes down to personal preferences. But if the deciding factor is the relative cost of each, the answer is quantifiable, even if it not immediately obvious given the different tax rates and other variables.

So we set out to do the math, based on an apartment and a house in the New York metropolitan area. Here?s what we found: a suburban lifestyle costs about 18 percent more than living in the city. Even a house in the suburbs with a price tag substantially lower than an urban apartment will, on a monthly basis, often cost more to keep running. And then there?s the higher cost of commuting from the suburbs, or the expense of buying a car (or two) and paying the insurance.

But the one big caveat in all the calculations is private schooling. If the city dwellers decide to send their children to private school ? say when their children hit middle-school age ? that expense would instantly make the suburbs a bargain.

?At some point, the benefits of the city are not worth the things you need to give up,? said Jessica Buchman, a senior vice president at Corcoran, a New York real estate brokerage, for instance, when five people have to share one bathroom, or there?s no outside space.

While our analysis was by no means scientific, our goal was to recreate the type of decision a hypothetical family of four earning $175,000 a year might encounter. We chose an upper-middle-class income because that?s generally what our family needs to earn, conservatively, to afford a median-price home in Park Slope, a section of Brooklyn that is family-friendly, has good schools and is generally more affordable than Manhattan.

The two-bedroom, one-bathroom co-operative apartment that we?re using as a model in Park Slope is listed at $675,000, close to the median price for the neighborhood, as calculated by Zillow.com.

We stacked that against a four-bedroom, two-and-a-half bathroom home in South Orange, N.J., just a 30-minute train ride from Manhattan, where the two parents work. The house is selling for $595,000.

The result? You obviously get more space for your money in the suburbs, but it cost about $1,285 more a month, or 18 percent, including income taxes, to live there. A tax expert also ran the numbers for a family earning $150,000, and the bottom line was generally the same.

Specifically, each month, the suburban family needs to lay out about $5,668 to run their home and commute to work in Manhattan, compared with $3,852 for the urban family. That includes most relatively static expenses ? from the mortgage, property taxes and homeowner?s insurance, to transportation, utility bills and, for the house, landscaping. Even though big repairs for the house, like replacing a water heater or putting on a new roof would heap on even more costs, estimating those expenses is so arbitrary that we chose to exclude them. (A full list of the expenses we did include can be found in a chart accompanying this article.)

?The big factor in this example is really the property taxes? in New Jersey, said Jude Coard, a tax partner at the New York accounting and advisory firm Berdon, who performed the income tax analysis.

But after you consider the impact of income taxes, and include the typical deductions, the difference between the two families narrows. That?s because the Brooklyn family?s annual income tax bill is about 21 percent more than the New Jersey family?s, in part because the Brooklyn couple pays New York City income taxes and receives less of a deduction on their much lower property taxes.

The big-ticket item that pushes the Jersey costs ahead is the property taxes, about $16,000 for our chosen house. And then there?s the cost of two cars, monthly train passes and higher utility bills. But if you add the sky-high private school tuition to the Park Slope family?s costs ? and the annual bill is often more than $25,000 a child ? the pendulum would swing back in favor of the suburbs.

?Those are really big numbers, especially when you have more than one child,? said Ms. Buchman, the broker.

For wealthier families, the calculus changes again because suburban living allows them to escape New York City taxes, which, at 3.65 percent of income above $90,000, can really add up, especially for families earning more than $300,000, Mr. Coard said.

Families weighing such a move need to do a fair amount of research to calculate their own monthly cash flow. The numbers will vary, sometimes greatly, depending on income, the property and state you?re living in, along with a host of other factors like whether they are subject to the alternative minimum tax. Then, there is cost of home maintenance ? always a wild card. Are you moving into a rambling old clapboard house or a freshly renovated home?

Naturally, these decisions aren?t always driven by numbers alone. Ms. Buchman, who represents buyers and sellers in Park Slope, said most of her clients aren?t ready ?for the exodus,? though she has seen an uptick in the number of clients leaving the city.

?It hasn?t been about value, it?s been about quality of life and having different options for their children?s education,? she said. ?It usually goes back to the suburban lifestyle of school buses and big football teams and cheerleaders.?

There are still plenty of couples, she said, who are planning to raise their twins in a two-bedroom.

Susan Joseph, a senior vice president of research and public affairs at a consulting firm in Manhattan, said she thought she fit that profile, planning on moving from her rent-stabilized one-bedroom apartment on the Upper West Side of Manhattan to Brooklyn when she had children.

?We wanted to be the Park Slope family,? said Ms. Joseph, 39. ?What we didn?t want was to live in the suburbs. To me, it meant sterile, boring strip malls and no diversity. I loved being able to walk everywhere.?

She and her husband, Marc Archer, 41, started to look in Park Slope for a larger place just before Ms. Joseph became pregnant with their daughter, Devin, and ultimately settled on a three-bedroom apartment in a newly constructed building on the fringes of Park Slope.

But then the baby arrived.

?I don?t think I realized how my priorities were going to change once she was around,? Ms. Joseph said. ?When Devin was a little bigger and started moving around, and when I thought about what our life might look like in Brooklyn, I kept talking myself into it. But it was just enough space. I felt like I couldn?t exhale.?

So the couple managed to pull out of their contract in March, and, by May, had bought a center-hall colonial in Montclair, N.J., where they already had friends.

?The five-bedroom, four-bathroom house with a yard and the requisite cuteness of Montclair cost less than a one-bedroom in Manhattan,? Ms. Joseph said. At $675,000, it also cost marginally less than the apartment in Park Slope, and they paid about $50,000 less than the seller did in 2008.

The newfound pleasures of suburbia are still fresh. Ms. Joseph recently marveled at the fact that she had a view of flowers, a big swing set and a deck from her kitchen window.

?Many people leave the city grudgingly, and the reason they can cede defeat and leave is the value proposition,? said Alex Silberman, a broker with Keller Williams Realty who works in Essex County, N.J. A move ?may resonate more with people as they go through their life changes.?

The reverse holds true, too. Many empty-nesters are giving up the high-maintenance house in the suburbs in exchange for the attractions of city life.

?We have loved it,? said Christiane Delessert, a financial planner in Waltham, Mass., who, with her husband, both in their 60s, moved from the suburbs to downtown Boston. ?As in any new situation, it is a balancing act between needs, wishes and the pocketbook.?

I was curious about the tax advantage of living in Jersey City rather than NYC. To what extent are higher state and local income taxes in NYC offset by higher property taxes in Jersey City?

I assume the purchase of a home 3.3 x annual income.

The chart shows additional taxes owed to city & state governments by income of the tax unit for those filing as single and those filing as married.

Calculations assumes:

* in NJ: deduction for property taxes (up to $10K as I understand this is the rule) in calculating NJ state income tax

* in NYC: standard deduction of 7500 for non-dependent singles and 15,000 for couples, unless property taxes exceed this amount.

Let me know what I might be forgetting.