Stay NJ is New Jersey’s most recent effort to give much-needed property tax relief to residents in one of the country’s highest-taxed states.
But the proposal, a big tax break for seniors signed into law by Gov. Phil Murphy in July 2023, was never going to work as written.
In its first coordinated effort to make the savings plan a reality, the state Legislature on Monday agreed to changes to make the program more feasible and less confusing for residents.
The bill (A4706) — passed overwhelmingly by both the state Senate and Assembly — would execute the findings of the Stay NJ Task Force, which was charged with creating a game plan to implement the tax break in time for its 2026 launch date. Most of the items were expected, but it also includes some “holy cow” provisions that many residents haven’t been expecting. And it still punts the big question of how to pay for it all.
Stay NJ, in conjunction with ANCHOR and Senior Freeze, is designed to cut property taxes by up to 50%, capped at $6,500, for residents 65 and older in New Jersey who earn less than $500,000 a year.
Assembly Speaker Craig Coughlin, D-Middlesex, Stay NJ’s author and biggest supporter, said with Monday’s passage, the state is one step closer to “historic property tax relief for New Jersey seniors.”
“This legislation will ensure the smooth implementation of Stay NJ, with seniors seeing their property taxes cut in half,” Coughlin said in a statement. “Families planning for the future will have affordable options and seniors will be able to retire in comfort, close to grandchildren and the communities they helped build.”
Murphy is expected to sign it into law, legislative sources said.
One of the most unwelcome surprises for homeowners will be how your property tax deductions will work going forward. It’s sure to tick off people whose wallets are still stinging after the federal SALT deduction — short for state and local taxes — was capped at $10,000 for some taxpayers and eliminated entirely for others starting with the 2018 tax year.
On your New Jersey tax return, right now, you can deduct up to $15,000 in property tax costs, and that number is not affected by the amounts you receive from ANCHOR and Senior Freeze.
But under this new change, before you deduct your property taxes on your state return, you’ll have to subtract your ANCHOR, Senior Freeze and Stay NJ benefits from your total amount of property tax before you take it as a deduction.
For example, let’s say you’re a senior citizen and your property tax bill is $15,000. Your maximum total benefit from the property tax relief plans would be $6,500. If you receive a $1,750 ANCHOR benefit and a $750 Senior Freeze benefit, plus $4,000 under Stay NJ, you’d only be able to deduct $8,500 — the amount of tax you actually paid after factoring in the benefits — on your state tax return.
Other changes to the property tax programs include:
- Calculating benefits: The original Stay NJ law established the maximum benefit amount you’d get when you add together ANCHOR, Senior Freeze and Stay NJ: 50% of the property tax bill or $6,500, whichever was greater. But under the formula, some seniors who receive supercharged Senior Freeze benefits because they’ve been in the program for decades — it started in 1997 — might have lost some savings. The new calculation would ensure no one will get a smaller benefit than they get today. So if a resident’s tax savings exceeds 50% of their property tax bill or $6,500 from ANCHOR and Senior Freeze combined, they wouldn’t have any cut to the benefit, but they also wouldn’t receive anything additional under Senior Freeze.
- Age and residency requirement: All of the programs would now share a requirement that people be residents of New Jersey as of Dec. 31 of the benefit year. For eligibility as a senior citizen, people would have to be age 65 by Dec. 31 of the benefit year.
- One application, one deadline: The current law has different applications and separate deadlines for each program, but under the changes, there would be a sole application for all of the benefits with a shared deadline. The application must be available as of Feb. 1 with a deadline of Oct. 31 each year.
- The meaning of “income” and cutoffs: Today, ANCHOR, Senior Freeze and Stay NJ all use different definitions of income. That’s being changed so there would be a uniform definition across the three programs, and it would make a person’s countable income higher — potentially making fewer people eligible for the relief. It would use a person’s gross income before any deductions or exclusions, and it will include payments that are not taxable for some in New Jersey, including Social Security, pensions, annuities, other retirement income, interest income and distributions from Roth IRAs. Overall, the $500,000 total income cutoff for Stay NJ, criticized for being too high, wasn’t changed.
- Paying out benefits: When Stay NJ first became law, it required the payouts to be paid directly as a credit on residents’ property tax bills. The change now is that the benefit may be paid as a check, direct deposit or property tax credit.
The measure, however, ignores a vital piece of the plan: funding.
It would still be up to Murphy and top lawmakers to decide how to pay for it all in the state budget that begins in July.
There have been serious questions about whether there will be enough money to fully fund Stay NJ as the state contends with an expected budget crunch in the coming years. Some funding for the program has been set aside for Stay NJ, not not nearly enough, and full funding is required before payments are slated to go out in 2026.
One source said Coughlin expects to make this a “top of list” priority heading into budget negotiations in the spring.
Another legislative source said funding for Stay NJ “definitely could be an issue” as talks ramp up in the coming months, depending on how much surplus and revenue officials are dealing with.
State Sen. Declan O’Scanlon, R-Monmouth, the Republican Senate budget officer and a frequent Stay NJ critic, said he still believes this won’t get funded.
”It can’t,” O’Scanlon told NJ Advance Media. “Right now, the way law is written, our surplus isn’t large enough. We’d have to bolster surplus by another billion.“
State Sen. Jon Bramnick, R-Union — and a Republican candidate for governor — said lawmakers are “already amending this promise” and his “guess is” residents “will never get the money.
O’Scanlon argued that even this new bill “doesn’t do much,” in part because it doesn’t address funding.
”It’s just jumping through hoops,” he said.
But O’Scanlon added: ”Republicans are gonna vote for it because, hey, if we can’t get anywhere near primary tax relief, who are we to say no to it?”
The state Senate ultimately passed the bill 40-0 and the Assembly 73-1 at the Statehouse in Trenton.
NJ Advance Media staff writer Susan K. Livio contributed to this report.
Stories by Karin Price Mueller
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Karin Price Mueller may be reached at KPriceMueller@NJAdvanceMedia.com. Follow her on X at @KPMueller.
Brent Johnson may be reached at bjohnson@njadvancemedia.com. Follow him on X at @johnsb01.