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This would be correct. The W-2 is not wrong.
NJ does not allow certain pre-tax deductions, which the IRS does.
Take 401(k)'s for example: 401(kl) contributions are pre-tax and reduce the number reported in block 1 for fedearl tax purposes. However, NJ adds the 401(k) contributions back in. You pay tax on 401(k) contributions in NJ, because NJ considers them after tax.
It is often the case with my own and my clients, NJ W-2's, that our state taxable income is higher than the FED becasue NJ does not allow certain employer paid pre-tax benefits to be pre-tax.