If I pay city wage taxes, do I still have to file NJ state tax? And if so, why, if I'm not working in the state?

Yes, because EVERY state taxes their citizens for income earned regardless of WHERE the income is earned.

Now, NJ does give you a credit for the taxes you pay to the city in PA and for the state taxes you pay to PA, so you will NOT be double-taxed.

If you need tax help on this, contact me at the email address below.