Stay NJ is New Jersey’s latest effort to provide much-needed property tax relief to residents living in one of New Jersey’s highest tax states.
But this proposal, a massive tax cut for seniors signed into law by Gov. Phil Murphy in July 2023, never worked as written.
State lawmakers on Monday agreed to changes to make the savings plan more viable and less confusing for residents, in the first coordinated effort to make the savings plan a reality.
The bill (A4706), which passed overwhelmingly in both the state Senate and Assembly, created a Stay New Jersey task force tasked with developing a plan to implement the tax cuts in time for the 2026 effective date. The results of this study will be implemented. Most of the items were expected, but there are some “sacred” provisions that many residents weren’t expecting. And the big question remains how to pay for it all.
Stay NJ, in partnership with ANCHOR and Senior Freeze, aims to reduce property taxes by up to 50% (up to $6,500) for New Jersey seniors with annual incomes of less than $500,000.
Assembly Speaker Craig Coughlin (D-Middlesex), the author and biggest supporter of Stay New Jersey, said Monday’s passage gives the state “historic property tax relief for New Jersey seniors.” He said he was one step closer to
“This bill will ensure the smooth implementation of Stay New Jersey and give seniors half their property taxes,” Coughlin said in a statement. “Families planning for the future will have affordable options, and seniors will be able to retire comfortably near their grandchildren and the communities they have built.”
Murphy plans to sign the bill into law, legislative sources said.
One of the most unwelcome surprises for homeowners is how property tax credits will work going forward. It’s sure to be jarring for those whose wallets are still tingling despite the federal SALT deduction (which stands for state and local taxes) being capped at $10,000. Starting with the 2018 tax year, it will be completely repealed for taxpayers.
You can currently deduct up to $15,000 in property tax expenses on your New Jersey tax return. This number is not affected by the amount you receive from ANCHOR and Senior Freeze.
However, this new change requires that Anchor, Senior Freeze, and Stay New Jersey benefits be deducted from your total property tax bill before you can deduct it on your state return.
For example, let’s say you’re a senior citizen and your property tax bill is $15,000. The maximum total benefit from the property tax relief plan is $6,500. If you received $1,750 in ANCHOR benefits and $750 in Senior Freeze benefits, plus $4,000 under Stay NJ, you would only see $8,500 (the amount of taxes you actually paid after taking benefits into account) on your state tax return. It cannot be deducted.
Other changes to the property tax program include:
Calculating Benefits: The original Stay New Jersey law combined the maximum benefit amount for ANCHOR, Senior Freeze, and Stay New Jersey at the greater of 50% of your property tax bill or $6,500. It was determined. However, under the system, some seniors who have been receiving significantly increased Senior Freeze benefits because they have participated in the program, which began in 1997, for decades are unable to take a portion of their savings. may have been lost. The new calculations will ensure that no one gets less than they currently do. Therefore, if a resident’s tax savings exceeds 50% of their property tax bill, or $6,500 combined under ANCHOR and the Senior Freeze, there will be no reduction in benefits, but there will also be no additional receipt under the Senior Freeze. Age and Residency Requirements: All programs will share the requirement that you reside in New Jersey as of December 31 of the benefit year. To qualify as a senior citizen, you must reach age 65 by December 31 of the benefit year. One application, one deadline: Under current law, each program has different applications and separate deadlines, but under the changes, you can receive all benefits with a common deadline in a single application. Applications must be available as of February 1 of each year and the deadline is October 31 of each year. What “income” means and cutoffs: Currently, ANCHOR, Senior Freeze, and Stay New Jersey all use different definitions of income. This change results in a uniform definition across the three programs, potentially resulting in higher countable income for individuals and fewer people being eligible for relief. This uses an individual’s gross income before deductions and exclusions, and is tax-free for some New Jersey people, including Social Security, pensions, annuities, other retirement income, interest income, and distributions from Roth IRAs. Payment is also included. Overall, Stay New Jersey’s $500,000 gross income limit, which was criticized as being too high, remained unchanged. Benefit Payments: When Stay New Jersey first became law, it required direct benefit payments as a deduction from residents’ property tax bills. . What’s different now is that benefits can be paid by check, direct deposit, or as a property tax deduction.
But this measure ignores a key part of the plan: financing.
It will be up to Mr. Murphy and leading lawmakers to decide how to finance the full amount in the state budget that begins in July.
As the state faces an expected fiscal crisis in the coming years, there are serious questions about whether there will be enough money to fully fund Stay NJ. Although some funding for this program has been set aside for Stay NJ, it is not enough and full funding is required before disbursements are scheduled in 2026.
One source said Coughlin plans to make this a “top” priority heading into spring budget negotiations.
Another legislative source said Stay New Jersey funding “could definitely become an issue” as negotiations get into high gear in the coming months, depending on how much surpluses and revenue the agency is dealing with. “There is,” he said.
State Sen. Declan O’Scanlon (R-Monmouth), the Republican Senate budget director and a frequent critic of Stay New Jersey, said he believes the money will not be raised yet.
“That’s not possible,” O’Scanlon told NJ Advance Media. “At present, according to the provisions of the law, our surplus is not large enough. We will need to increase the surplus by another billion.”
State Sen. John Bramnick, a Republican candidate for governor, said lawmakers have “already revised this promise” and that “residents will never get their money.”
Mr O’Scanlon argued that even this new bill “doesn’t help much”. One reason for this is that it does not mention funding.
“It’s just jumping through hoops,” he said.
But, O’Scanlon added, “Republicans are going to vote for it, because if we can’t get close to the first round of tax cuts, who’s going to say no to it?”
The state Senate ultimately passed the bill 40-0 at the State House in Trenton, and the Assembly voted 73-1.
NJ Advance Media staff writers Brent Johnson and Susan K. Livio contributed to this report.
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Karin Price Mueller can be reached at KPriceMueller@NJAdvanceMedia.com. Follow her on X @KPMueller.
