If you choose to live in New Jersey (or most any other state) after you graduate not only do you need to pay federal taxes but you also need to pay state income taxes. State income tax is deductible from federal income tax. To properly determine your tax bill follow these steps:

1. Calculate the amount of state income taxes you owe.
2. Then, deduct (subtract) your state income taxes from your total income.
3. Use the new number (income minus state taxes) to calculate your federal tax bill.
4. Your total tax bill is the sum of your state tax bill plus your federal tax bill.