Gov. Chris Christie has decided to maintain a tax reciprocity agreement with Pennsylvania that allows residents who work in either state to pay income taxes at their home state's rate.

The governor had announced in September that he was pulling the state out of the nearly 4-decade-old agreement. That would have raised taxes for thousands of New Jersey and Pennsylvania residents who commute across the Delaware River for work.

But Christie said Tuesday that legislation recently passed by state lawmakers will help rein in health care costs for public employees. 

"By addressing a potential $250 million budget deficit from growing healthcare costs, we are now able to save an income tax reciprocity agreement with Pennsylvania that protects tens of thousands of hard working New Jerseyans from having to pay more income taxes," Christie said in a statement.

He says that eliminates the need to pull out of the deal, a move that had been sharply criticized by residents and business owners in both states.