LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

SENATE, No. 1756

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: JUNE 2, 2025

 

 

SUMMARY

 

Synopsis:

Revises criteria to establish base year for homestead property tax reimbursement after relocation.

Type of Impact:

Increase in annual State costs to the Property Tax Relief Fund.

Agencies Affected:

Department of the Treasury, Division of Taxation.

 

Office of Legislative Services Estimate

Fiscal Impact

FY 2026 

FY 2027 

FY 2028 

 

State Cost Increase

$0

$30,800 to $154,000

$63,600 to $317,900

 

 

 

 

·         The Office of Legislative Services (OLS) estimates that this bill will increase State costs by about $30,800 to $154,000 in FY 2027 and $63,600 to $317,900 in FY 2028.  The bill would not have a fiscal impact in FY 2026 due to the timing of homestead property tax reimbursement payments.  

·         Data provided by the Division of Taxation indicates that approximately 100 homeowners in each year from calendar year 2018 through calendar year 2020 regained their eligibility for the homestead property tax reimbursement following a change in residence.  The OLS assumes that 100 to 500 homeowners will be affected by the bill.

·         The OLS notes that the bill would not impact State costs associated with providing property tax relief to an eligible claimant who is also eligible to receive a Stay NJ property tax credit.  In this scenario, the bill would instead result in a redistribution of costs between the homestead property tax reimbursement program and the Stay NJ property tax credit program.

 

 

BILL DESCRIPTION

 

      The bill revises the criteria for re-establishing a claimant’s base year under the homestead property tax reimbursement program.  Under current law, when an eligible claimant moves from one homestead to another, the base year changes to the first full tax year during which the person resides in the new homestead.  The claimant must wait an additional tax year in order to qualify for the homestead property tax reimbursement.

      This bill allows a claimant to retain their eligibility following a move to another homestead in New Jersey.  Thus, a claimant would be able to qualify as an eligible claimant immediately following a move and is not required to wait an additional tax year in order to claim a reimbursement.  In this circumstance, the homestead property tax reimbursement payment would be based on the property taxes assessed on the current homestead for the tax year prior to which the claimant resides in the current homestead.  If the homestead is new construction, the base year would be the first full tax year following the completion of the new construction. 

      Established in 1997, the homestead property reimbursement program is popularly known as the “Senior Freeze” program.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS concludes that this bill will result in additional State costs of approximately $30,800 to $154,000 in FY 2027 and $63,600 to $317,900 in FY 2028.  The projected additional State cost for FY 2027 includes the value of homestead property tax reimbursements provided to repeat program participants who initially requalify in FY 2027 and claimants who regain their eligibility in FY 2028.  The bill would not have a fiscal impact in FY 2026 due to the timing of homestead property tax reimbursement payments.

      To calculate the number of property owners affected by the bill, the OLS used data from the Division of Taxation on the number of eligible claimants for the homestead property tax reimbursement who become ineligible to participate due to a change in residence and then regained their eligibility at a new residence.  According to the Division of Taxation, approximately 100 homeowners in each year from calendar years 2018 through 2020 regained their eligibility for the homestead property tax reimbursement following a change in residence.  For purposes of this estimate, the OLS estimates that 100 to 500 homeowners will be affected by the bill.  It is reasonable to expect a relatively small applicant pool, since members of this segment of the population have a lower mobility rate.

      The OLS notes that the provisions of the bill would allow eligible claimants to receive a homestead property tax reimbursement two years earlier than currently allowed following their relocation to another homestead.  Under current law, a homeowner who moves into to a new homestead in calendar year 2025 would have their base year reset to calendar year 2026 (the first full tax year they reside in the new homestead).  Assuming they pay all of their property taxes in calendar years 2026 and 2027, they would apply for a homestead property tax reimbursement in 2028 and receive a payment later that year.  Because homestead property tax reimbursement payments are usually made in the summer and fall, the State would not incur any new costs until FY 2029.  Under the bill, a homeowner who moves to a new homestead in calendar year 2025 would have their base year reset to calendar year 2024, assuming that all other eligibility criteria are met.  If they pay all of their property taxes in calendar year 2025, they would apply for and receive a homestead property tax reimbursement in 2026 (or FY 2027).

      According to property tax data available through the Division of Local Government Services, the Statewide average property tax bill in calendar year 2024 was $10,095.  The data also indicate that the average residential property tax bill has increased by 3.05 percent per year since calendar year 2019.  Based on these data, the OLS estimates that the average residential property tax bill will be $10,403 in calendar year 2025.  Given that the homestead property tax reimbursement is equal to the difference between a claimant’s property taxes in their base year and that claimant’s property taxes in the current year, the OLS estimates that the average reimbursement provided to impacted claimants would be $308 in FY 2027.  This amount, multiplied by the estimated number of claimants, yields an increase in State costs for FY 2027 of $30,800 to $154,000.  Extrapolation of this data was performed to obtain the second year cost for eligible claimants who requalify for a homestead property tax reimbursement in FY 2028.

      The timing of homestead property tax reimbursement payments precludes the bill from having a fiscal impact in FY 2026.  In calendar year 2025, newly eligible claimants will receive a homestead property tax reimbursement equal to the difference between their property taxes paid in calendar year 2024 and calendar year 2023.  The bill provides that when an eligible claimant moves to a new homestead, their new base year is the first full tax year prior to the year in which they moved to a new homestead.  An eligible claimant that moves in calendar year 2025 would have their base year reset to calendar year 2024.  However, the bill provides that immediate eligibility following a relocation will not apply prior to January 1, 2026.  Since homestead property tax reimbursement payments are usually made to eligible claimants in the summer and fall, the calendar year 2025 homestead property tax reimbursement payment will be mailed in FY 2027.  Because the new base year is prior to January 1, 2026, immediate re-eligibility would not apply to an otherwise eligible claimant who moved to a new homestead in calendar year 2024.

      The OLS notes that the bill would not affect the total costs of providing property tax relief to an eligible claimant who is also eligible to receive a Stay NJ property tax credit.  In this situation, the bill would instead result in a redistribution of costs between the homestead property tax reimbursement program and the Stay NJ property tax credit program.  Under current law, the total amount of property tax relief provided through the homestead property tax reimbursement, the ANCHOR Property Tax Relief Program, and the Stay NJ property tax credit program cannot exceed 50 percent of an eligible claimant’s property tax bill, subject to certain annual limitations.  Thus, if a homeowner receives a larger homestead property tax reimbursement as a result of the bill, the amount of their Stay NJ property tax credit will be proportionally reduced to ensure that the total amount of property tax relief they receive does not exceed the statutory maximum.

 

Section:

Revenue, Finance, and Appropriations

Analyst:

Scott A. Brodsky

Staff Fiscal and Budget Analyst

Approved:

Thomas Koenig

Legislative Budget and Finance Officer

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).