I was wondering what are the tax advantages to living in New Jersey and working in Manhattan. In particular:

(1) Is it true that by living in NJ and working in Manhattan, one does not have to pay New York city tax? Nor pay Yonkers taxes? So that the only non-federal tax for such a person would effectively be New York state tax?

(2) Is it also the case that by living in New Jersey and working in Manhattan, one is not effectively subjected to ANY New Jersey state taxes?

Thanks.

If you live in NJ and work in NY, you must report the income on NY state tax return. You will not pay city tax.

You will also report the same income on NJ tax return. On NJ tax return, you will claim credit for the taxes paid to NY.
Read: Your U.S. Tax Return: Working or Living in Two or More states (http://taxipay.blogspot.com/2008/06/working-in-two-or-more-states.html)

Both of your questions are true.

On #2, you probably will NOT pay any NJ tax if all of your income is NY-sourced. However, you DO have to file a NJ tax return.