LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
SENATE, No. 343
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: FEBRUARY 3, 2022
SUMMARY
Synopsis: Increases, from 18 percent to 30 percent, amount of rental payments
defined as rent constituting property taxes for purposes of deduction
from gross income for property tax payments.
Type of Impact: Annual reduction in gross income tax revenue deposited into Property
Tax Relief Fund.
Agencies Affected: Department of the Treasury.
Office of Legislative Services Estimate
Fiscal Impact FY 2023 and Each FY Thereafter
Annual State Revenue Loss $85.7 million to $135.5 million
 The Office of Legislative Services (OLS) estimates that increasing the amount of rent
constituting property taxes, which would allow income taxpayers to deduct a higher amount of
rent from their gross income, could reduce State revenues by roughly $85.7 million to $135.5
million annually.
 The OLS notes that the COVID-19 pandemic has affected both occupancies and the price of
rent. The actual impact of the bill may initially vary from the OLS estimate, since the rental
market in New Jersey is still recovering from the pandemic.
BILL DESCRIPTION
This bill increases the amount of rent constituting property taxes from 18 percent of rent paid
to 30 percent of rent paid.
Under the Property Tax Deduction Act, a taxpayer is entitled to a deduction of up to $15,000
from gross income for property taxes, or the rental equivalent thereof paid by tenants, due and paid
for that calendar year on a taxpayer’s homestead. For tenants, the amount of the deduction is based
on the amount of rent constituting property taxes. Current law sets the amount of rent constituting
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
 FE to S343 [1R]
2
property taxes at 18 percent of the rent paid by the taxpayer for the occupancy, during the taxable
year, of a unit of residential real property that the taxpayer occupies as a principal residence.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that increasing the amount of rent constituting property taxes, which would
allow income taxpayers to deduct a higher amount of rent from their gross income, could reduce
State revenues by roughly $85.7 million to $135.5 million annually. The OLS notes that the
COVID-19 pandemic has affected both occupancies and the price of rent. The actual impact of
the bill may initially vary from the OLS estimate, since the rental market in New Jersey is still
recovering from the pandemic.
The most recent State Statistics of Income report provides the total value of the property tax
deduction claimed ($12.5 billion in Tax Year 2016), for both homeowners and renters, but does
not delineate between property tax payments and rent constituting property taxes paid. Thus, the
OLS must extrapolate from other data sources to project the fiscal impact of the bill.
According to the 2020 American Community Survey – Selected Housing Characteristics (New
Jersey), approximately 1.2 million housing units in this State were renter-occupied. Based on
gross rent data from the same survey, the OLS assumes that renters deduct roughly $3.7 billion in
rent as property taxes paid. Under the new formula, the amount of rent deductible by renters would
increase to $6.1 billion, an increase of $2.4 billion. The OLS applied various marginal rates under
the gross income tax to the $2.4 billion based on assumptions concerning a renter’s gross rent and
income. The OLS estimates that the difference in the deduction between current law and the bill
yields an estimated annual State revenue loss to the Property Tax Relief Fund of $85.7 million to
$135.5 million annually.
Section: Revenue, Finance and Appropriations
Analyst: Jordan M. DiGiovanni
Revenue 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.).


Statutes affected:
Introduced: 54A:3A-16
Reprint: 54A:3A-16