New Jersey’s property tax breaks, including the popular Senior Freeze and ANCHOR benefits, could soon undergo dramatic changes as the state tries to keep its promise to further cut taxes for senior citizens under the Stay NJ law, according to recommendations released Thursday.
The long-awaited report comes from the Stay NJ Task Force, which was charged with figuring out how to implement the law in time for the 2026 payment deadline.
Stay NJ, in conjunction with ANCHOR and Senior Freeze, is designed to slash property taxes by up to 50%, capped at $6,500, for senior citizens in New Jersey who earn less than $500,000 a year — though critics have long warned that finding the funding to launch the program at all will be a challenge.
The recommendations, reviewed by NJ Advance Media, include a plan to simplify the state’s overall property tax break regime by having one application for all three programs.
“A single comprehensive application along with consolidation of the programs in a sequential manner, followed by changes to how benefits are paid, should be accomplished in steps,” the report said.
If the recommendations are adopted by the state Legislature and signed by the governor, it would mean:
- The calculations are complicated: The bottom line is that senior homeowners would get 50% off their property tax bills, capped at $6,500, from a combination of Stay NJ, ANCHOR, and Senior Freeze. Also, no one would get less than they currently receive under ANCHOR and Senior Freeze together.
- Benefit calculation: The state Division of Taxation would compare a senior homeowner’s combined ANCHOR and Senior Freeze benefit to a Stay NJ benefit. “An applicant would receive the higher of the two, up to 50% of property taxes, not to exceed $6,500,” it said. If the senior homeowner has not received the equivalent of 50% of their taxes, up to $6,500, from ANCHOR and Senior Freeze combined, an additional benefit under Stay NJ would be paid by check. Homeowners not eligible for ANCHOR or Senior Freeze but eligible for Stay NJ would receive the maximum Stay NJ benefit of $6,500 or 50% of their property taxes.
- Checks, then credits: Because of the complicated nature of providing property tax credits through the state’s 564 municipalities, the Stay NJ benefit, rather than being paid as a quarterly credit, would be sent to senior homeowners as a check in the first year. The goal would be to make the Stay NJ payment a credit on tax bills in the program’s second year.
- One application: Residents would complete one application for Stay NJ, ANCHOR, and Senior Freeze effective Feb. 1, 2025, and legislation would need to be passed at least 90 days prior to make sure there’s time to design, print and mail the combined application.
- Changes to residency and age requirements: All three programs would require a full year of residency as of Dec. 31, 2024. New Senior Freeze applicants would need to be 65 as of Dec. 31, 2023.
- Streamlined income definition: ANCHOR and the Senior Freeze currently have different definitions of “taxable income.” These definitions would be made the same under all the tax break programs.
- Renters: Renters are not eligible for Stay NJ or Senior Freeze but would continue to receive the ANCHOR benefit via check or direct deposit.
The task force also addressed a change that’s sure to confuse some ANCHOR recipients. By making all three benefits move to the same timeline, there would be no ANCHOR benefit labeled for 2023, but eligible residents would still get annual payments as long as it’s funded in the yearly budget.
State Assembly Speaker Craig Coughlin, D-Middlesex, the main author of the Stay NJ law, told NJ Advance Media it’s really not a lost benefit year.
“It will just jump,” Coughlin said. “You’ll still get (an ANCHOR benefit) every year. It’s not like we’re taking a year off.”
Coughlin said the goal is to have a “common application” to “operate out of the same base,” and the task force proposed using the benefit year 2024, so ANCHOR will need to be adjusted.
Still, the report said people who were eligible for the 2022 ANCHOR benefit but then have changes in residency, income or homeowner status may not be eligible for the 2024 benefit. The estates of deceased people that qualified in 2022 will lose a year if the benefit year for eligibility date is moved to 2024, the report said. And finally, some newcomers to the state may have to wait a year to become eligible for ANCHOR because of the new 12-month residency requirement.
Gov. Phil Murphy’s office did not immediately respond to requests for comment about the recommendations.
The timing of the report is vital. Murphy and his fellow Democrats — including Coughlin — who control the Legislature are in the midst of a sometimes heated push and pull on how to spend taxpayer money in the state budget for the next fiscal year. The tax cut is expected to be a weighty bargaining chip as deals are struck and key players dangle possible compromises to get to the finish line.
Negotiations are about to enter the critical final month. If they don’t reach an agreement by June 30, the state government could be shut down.
- MORE: The big property tax promise
- MORE: Property tax showdown?
HOW MUCH WILL YOU GET?
How much each homeowner and renter would get if the recommendations are adopted would vary greatly based on eligibility.
The ANCHOR program, which has no age restrictions, would continue to be funded annually through the budget. The next benefit year, for the 2021 tax year, would pay eligible homeowners up to $1,500 and qualifying renters $450, plus an extra $250 for both senior renters and homeowners. The payments are made by direct deposit or check.
Under the recommendations, nothing would change for renters.
The total received by homeowners, though, will depend on additional specifics.
Property tax benefits under the Stay NJ Task Force recommendations will be different for each eligible homeowner. Canva illustration for NJ.com
The Senior Freeze, which reimburses eligible senior citizens and disabled persons for property tax increases, currently offers a credit made directly onto a property tax bill. How much a homeowner receives depends on when they first applied and how high their taxes have gone up since then. Long-time recipients could receive well over $1,000, while the benefit for new applicants is far lower.
Under the Stay NJ recommendations, the amount received for both Senior Freeze and ANCHOR will be added together. If the amount is less than 50% of a homeowner’s property tax bill, capped at $6,500, the homeowner would get additional money under the Stay NJ name. That payment would come as a check or direct deposit in the first year, and as quarterly credits on tax bills in subsequent years.
As an example. take a senior homeowner who has income of $75,000 a year and who owns a home with a $10,000 property tax bill. The homeowner’s maximum Stay NJ benefit would be $5,000, or 50% of the tax bill. The homeowner also qualifies for a $1,750 ANCHOR benefit and a $1,000 Senior Freeze benefit, which add up to $2,750. Because those two combined benefits are less than the homeowner’s maximum Stay NJ benefit of $5,000, the homeowner would receive an additional Stay NJ check for $2,250.
It would work differently for a homeowner who has income of $300,000, who would be ineligible for the ANCHOR and Senior Freeze benefits because of income cutoffs. If the homeowner has property taxes of $20,000 a year, they would receive the maximum Stay NJ benefit of $6,500.
A homeowner who has income of $160,000 would encounter another scenario. Let’s say that person, with annual property taxes of $13,000, has a maximum Stay NJ benefit of $6,500. They also receive a $750 Senior Freeze benefit but are not eligible for an ANCHOR payment because of income limits. So in addition to the Senior Freeze credit of $750, they would receive a Stay NJ check for $5,750.
THE NEXT HURDLE
When it comes to spending priorities in Trenton, there’s rarely a consensus, and there’s only so much money to go around.
Murphy in February proposed a $55.9 billion state budget that includes $200 million to ramp up funding for Stay NJ before its planned 2026 launch. Stay NJ supporters say it’s not enough to prepare for the 2026 program launch.
Lawmakers are concerned in general about the state’s finances as Murphy’s budget proposal would spend $1.8 billion more than it draws in from taxes and fees. That means the state might have to use money from the surplus to cover some spending, a potential problem because the Stay NJ law requires a 12% surplus be maintained, among other benchmarks, before any benefits from the program can be doled out.
Fears over funding have been hitting home with each monthly report on how much tax revenue the state is taking into its coffers as pandemic-era cash infusions dry up. Indeed, the state Treasury Department’s accounting of tax receipts has been running about 2% lower than last year.
It all sets the stage for a battle between advocates for two large and loud groups of residents — the state’s commuters and its senior citizens — just as Murphy and lawmakers dive into the most intense part of negotiations over spending, with just weeks to the deadline.
The state’s spending plan could pit advocates for commuters against those of senior citizens. Canva illustration for NJ.com
Murphy has called for lawmakers to pass a new corporate transit fee, meant to provide an ongoing funding source to get and keep NJ Transit out of fiscal disorder.
Standing in his way could be Coughlin, Stay NJ’s biggest supporter.
Coughlin could use Murphy’s desire for the transit tax as leverage to get more money set aside for Stay NJ, three sources previously told NJ Advance Media, with one calling property tax relief the Assembly speaker’s “No. 1 priority.” The source said Coughlin could even demand part of the transit tax be earmarked for Stay NJ funding.
With budget talks about to kick into high gear, Coughlin said he‘s generally concerned about the state spending more than it takes in.
“That’s a threat to everything,” he said. “We have to look at the budget right now and make meaningful progress in terms of eliminating that structural deficit.”
Coughlin stopped short of framing the funding of Stay NJ as a commuters vs. seniors debate, telling NJ Advance Media he supports funding the transit system but the state’s spending plan has to be looked at as a whole.
“Part of that is property tax relief,” he said. “I want to make sure we continue to support the biggest property tax relief in the history of the state because it means so much to people.”
“I don’t know if it is purely X versus Y.”
Coughlin said he was largely pleased with the task force recommendations, adding that streamlining the application is a challenge but important to make the process easier and more seamless for seniors.
“This takes us one step closer to making Stay a reality,” he added. “We know it’s gonna happen. But we needed to go over these challenges.”
Coughlin said the next step is for the Legislature to pass bills implementing the recommendations, adding that could happen in the coming weeks. He also said he wants to keep the task force running to figure out how to give residents benefits as a tax credit rather than a check as soon as possible.
State Senate President Nick Scutari, D-Union, another important budget negotiator, did not immediately return a request seeking comment.
State Sen. Declan O’Scanlon, the Republicans’ budget officer in the Senate, said despite the report, he still doesn’t believe the program will ever be funded, especially with the structural deficit in this year’s budget.
”This is an election-year gimmick, and Democrats are now desperately trying to keep their pledge,” O’Scanlon said. “We already see it being watered down and excuses being made. … It’s the same B.S. garbage we said it was when it was announced.”
