LEGISLATIVE FISCAL ESTIMATE
[Second Reprint]
ASSEMBLY, No. 1
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: AUGUST 9, 2023
SUMMARY
Synopsis: Establishes Stay NJ property tax credit program; establishes Stay NJ
Task Force; expands income limit and modifies ownership
requirement for eligibility to receive homestead property tax
reimbursement; enhances ANCHOR benefits for seniors; and makes
appropriations.
Type of Impact: Increased State costs.
Agencies Affected: Department of the Treasury.
Municipalities.
Office of Legislative Services Estimate
Fiscal Impact FY 2024 FY 2025 FY 2026 through FY 2028
Annual State Cost $143.7 million $17.5 million $2.1 billion to $2.5 billion
Less: Annual State
Cost Savings $0 $0 $944.8 million to $834.1 million
Annual Net State Cost $143.7 million $17.5 million $1.2 billion to $1.7 billion
 The Office of Legislative Services (OLS) estimates that the provision of enhanced Affordable
New Jersey Communities for Homeowners and Renters, or ANCHOR, benefits and the
expansion of eligibility for the homestead property tax reimbursement will increase State costs
by $143.7 million in FY 2024 and $17.5 million in FY 2025.
 The projected cost of the first year of the Stay NJ property tax credit program ranges from $2.1
billion to $2.4 billion, increasing to as high as $2.5 billion by FY 2028. These costs would be
partially offset by savings of approximately $944.8 million in FY 2026 to $834.1 million in
FY 2028 due to reduced participation in the ANCHOR Property Tax Relief Program and the
homestead property tax reimbursement program. The cost savings will be higher in FY 2026
because senior citizen homeowners will receive a Stay NJ property tax credit instead of the
enhanced ANCHOR benefits provided by the bill.
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
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 The State will incur additional costs in FY 2024 due to increased ANCHOR benefits provided
by the bill, costs associated with an ANCHOR marketing and outreach campaign, and funding
to support the Stay NJ Task Force. Costs associated with the additional ANCHOR benefits
will be fully phased out beginning in FY 2027.
 Although the bill requires additional State appropriations to support the program, beginning
with an initial allocation of $100 million in FY 2024, these appropriations will not be sufficient
to pay for the full cost of the Stay NJ property tax credit program.
 The OLS notes the bill increases the homestead property tax reimbursement program’s income
eligibility limit and reduces the program’s home ownership waiting period. However, since
most homeowners who would qualify for a homestead property tax reimbursement are also
likely to qualify for, and receive, a Stay NJ property tax credit, the proposed changes to the
homestead property tax reimbursement eligibility requirements are likely to result in an
increase in State costs in FY 2025 only. The OLS anticipates that nearly all senior freeze
recipients will migrate to the Stay NJ property tax credit program beginning in FY 2026.
BILL DESCRIPTION
The bill provides property tax benefits to senior citizens through a new program, named the
Stay NJ property tax credit program, and expands eligibility requirements for the homestead
property tax reimbursement program, colloquially known as the “senior freeze,” for senior citizens
and disabled persons. The bill provides enhanced property tax benefits to homeowners and renters
age 65 years or older through the Affordable New Jersey Communities for Homeowners and
Renters, or ANCHOR, Property Tax Relief Program. The bill establishes the Stay NJ Task Force
in the Department of the Treasury to develop recommendations for establishing and funding
uniform property tax relief for all senior citizens and tenants making less than $500,000 per year.
Stay NJ: The Stay NJ property tax credit program provides to an eligible claimant a property
tax credit in the amount of 50 percent of the property tax paid on the claimant’s principal residence
in the prior tax year, initially up to a maximum of $6,500 per year. After the first year of the
program, the maximum Stay NJ benefit will increase annually based on the increase in the average
residential property tax bill, as computed by the Division of Local Government Services in the
Department of Community Affairs. Program eligibility is limited to eligible claimants with gross
income for the prior tax year of less than $500,000. A property taxpayer who is eligible to receive
a rebate through the ANCHOR Property Tax Relief Program and the homestead property tax
reimbursement program is entitled to the greater of the Stay NJ property tax credit or the combined
amount of the ANCHOR property tax rebate and the homestead property tax reimbursement.
Operationally, a Stay NJ property tax credit would be issued by a municipality as an adjustment to
a homeowner’s property tax bill. The municipality would receive a payment from the State equal
to the total amount of property tax credits.
The bill requires the Division of Taxation to promulgate, by July 1, 2025, a single combined
application form to be used by State residents to apply for the ANCHOR rebate program, the
homestead property reimbursement, and the Stay NJ property tax credit. The bill requires the
division to determine which property tax relief programs would provide the greatest benefits to an
applicant.
The bill establishes a dedicated, nonlapsing account in the Department of the Treasury, for the
purpose of providing property tax relief to homestead owners and tenants through the Stay NJ
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property tax credit program, and funding program administrative costs, including reimbursements
to municipalities. The bill requires additional appropriations in future fiscal years as follows: $100
million in Fiscal Year 2024; $200 million in Fiscal Year 2025; and $300 million in Fiscal Year
2026. The first Stay NJ credits would be provided in calendar year 2026 if there are no delays in
the promulgation of the combined single application form.
Homestead Property Tax Reimbursement: The bill increases the income eligibility limit for
the homestead property tax reimbursement program to $150,000, beginning in tax year 2022, and
reduces the 10-year waiting period to only three years of homeownership of the property for which
a reimbursement is being sought. Due to the timing of homestead reimbursement payments, these
changes would take effect for reimbursements provided in Fiscal Year 2025.
ANCHOR Property Tax Relief Program: The bill increases by $250 the amount of the rebate
provided to homeowners and tenants age 65 years or older through the ANCHOR Property Tax
Relief Program. The ANCHOR Property Tax Relief Program provides rebates, in varying
amounts, to homeowners with gross income not in excess of $250,000 and to renters with gross
income not in excess of $150,000. The bill appropriates $15 million from the General Fund to the
Department of the Treasury for a marketing and outreach program to inform eligible homeowners
and renters age 65 and older of the availability of the increased ANCHOR benefits.
Stay NJ Task Force: The six-member Stay NJ Task Force established by the bill is charged
with developing recommendations regarding the provision of property tax relief to senior citizen
homeowners and tenants with annual gross income of less than $500,000 per year. The task force
is required to review current property tax relief programs and present recommendations to the
Governor and the Legislature, no later than May 30, 2024, a report concerning how to consolidate
those initiatives into a single program that provides property tax relief to senior citizens with
annual gross income of less than $500,000 per year. The report would include recommendations
concerning system improvements by the State and local governments that are necessary to
implement the Stay NJ property tax credit program and the funding required to establish and
maintain those improvements. The task force is required under the bill to provide
recommendations that have a target implementation date of January 1, 2026. The bill appropriates
$2 million from the General Fund to the Department of the Treasury to support the Stay NJ Task
Force.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS concludes that the bill will result in additional State costs. In FY 2024, the State will
incur additional costs of approximately $143.7 million as follows: $126.7 million to provide
enhanced ANCHOR benefits to homeowners and renters over age 65, $15.0 million for an
ANCHOR outreach and marketing campaign, and $2.0 million for expenses associated with the
Stay NJ Task Force. In FY 2025, the State will incur additional State costs of approximately $17.5
million as follows: $3.5 million to provide the second year of enhanced ANCHOR benefits to
homeowners and renters over age 65 and $14.0 million due to the expansion of eligibility for the
homestead property tax reimbursement program.
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The implementation of the Stay NJ property tax credit program will result in additional State
costs of $2.1 billion to $2.4 billion in FY 2026. These costs will be partially offset by anticipated
savings of senior citizen homeowners who currently participate in the ANCHOR and homestead
property tax reimbursement programs shifting to the Stay NJ property tax credit program.
Applying these cost savings reduces the program cost range to $1.2 billion to $1.5 billion. Program
costs will increase to $1.3 billion to $1.6 billion in FY 2027 and to $1.4 billion to $1.7 billion in
FY 2028.
Although actual program expenditures will fluctuate in succeeding fiscal years due to changes
in property taxes and participation levels among eligible claimants, the OLS estimates that
program costs will grow by about two percent annually, in line with recent Statewide average
increases in property taxes. The bill requires additional State appropriations, beginning at $100
million in FY 2024 and increasing to $300 million in FY 2026 to support the Stay NJ property tax
credit program. These appropriations will not be sufficient to cover the program’s full cost.
Under the bill, the failure to enact reforms proposed by the Stay NJ Task Force will delay the
development of the combined property tax relief application form, which, in turn, will delay the
implementation of the Stay NJ property tax credit program to an unknown date in the future. For
purposes of this estimate, the OLS projects that the Stay NJ property tax credit program is operative
beginning January 1, 2026.
Stay NJ
According to the Department of the Treasury, 469,044 senior citizens and disabled
homeowners received a FY 2023 ANCHOR benefit. Information available through the U.S.
Census Bureau’s 2021 American Community Survey’s 5-Year Estimates suggests there are
674,199 owner-occupied housing units with a householder age 65 or older in this State. (A
householder is the person, or one of the people, in whose name the home is owned, being bought,
or rented.) If householders counted in the American Community Survey are roughly equivalent to
homeowners, then approximately 70 percent of homeowners age 65 or older participated in the
ANCHOR program in FY 2023.
Information published by the Department of the Treasury in the Statistics of Income: 2017
Gross Income Tax Returns indicates that about 1.5 percent of tax returns with at least one filer
over age 65 reported gross income of more than $500,000. For purposes of this estimate, the OLS
projects that the income eligibility limit will cause two percent of homeowners over the age of 65
to be excluded from the program. Since the gross income eligibility limit will exclude a small
number of homeowners and the prospect of a larger property tax benefit will motivate more senior
citizens to participate in the Stay NJ property tax credit program, the OLS estimates that 70 percent
to 80 percent of eligible claimants will apply for a property tax credit.
Based upon municipal property tax information available through the Division of Local
Government Services, the OLS estimates that the Statewide average residential property tax bill
increased by an average of 1.78 percent annually from calendar year 2017 through calendar year
2022. To estimate the amount of property taxes that would serve as the basis for the Stay NJ
property tax credit, the OLS applied this growth rate to the 2022 average residential property tax
bill for each municipality to estimate the calendar year 2025 average residential property tax bills.
Using the American Community Survey data and the property tax information, the OLS calculated
the amount of Stay NJ property tax credits that would be provided to taxpayers in each
municipality. The sum total of these amounts constitute the FY 2026 program costs of $2.1 billion
to $2.4 billion. Assuming that expenditures increase by about two percent annually, program costs
are estimated to be as high as $2.5 billion by FY 2028.
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Stay NJ Program Appropriations
Although the bill requires appropriations of $100 million in FY 2024, $200 million in FY 2025,
and $300 million in FY 2026 to support the Stay NJ property tax credit program, this funding will
not be sufficient to cover the program’s full cost. The OLS estimates that Stay NJ’s initial cost,
after accounting for program savings, will be $1.2 billion to $1.5 billion. Therefore, even if the
full amounts required under the bill are appropriated and held in the dedicated account, the State
would need to appropriate an additional $600 million to $900 million in FY 2026 to support the
full cost of the first-year Stay NJ property tax credit program.
Impact on the ANCHOR Program
The ANCHOR Property Tax Relief Program currently provides rebates to homeowners, in the
amount of either $1,000 or $1,500, depending on their gross income. The bill increases ANCHOR
benefits for homeowners and tenants age 65 and over by $250 in fiscal years 2024, 2025, and 2026.
In comparison to the FY 2023 benefit levels, the new benefit amount would be as follows: the
benefit for homeowners age 65 and over with gross income not in excess of $150,000 rises from
$1,500 to $1,750; the benefit for homeowners with a gross income in excess of $150,000 but not
in excess of $250,000 rises from $1,000 to $1,250; and the benefit for tenants rises from $450 to
$700.
The Department of the Treasury has indicated that 469,044 senior citizen and disabled
homeowners and 69,219 senior citizen and disabled tenants received a FY 2023 ANCHOR benefit.
The OLS estimates that FY 2023 ANCHOR rebate payments to senior citizens and disabled
persons totaled $684.7 million. The FY 2024 Governor’s Budget estimates that the number of
senior citizen and disabled homeowners participating in the ANCHOR program, and the total
amount of benefits paid to those participants, will increase by about 1.9 percent in FY 2024. Under
the current program, FY 2024 ANCHOR benefits for senior citizens and disabled persons are
projected to cost $729.8 million. With the increased benefit, the FY 2024 costs increase by $137.3
million, to $867.1 million; and by an additional $3.5 million for FY 2025, for a two-year total of
$143.8 million. The OLS projects that 90 percent of these costs, or $126.7 million, are attributable
to senior citizens.
Although the bill requires the additional ANCHOR benefits to be provided in FY 2026, the
OLS anticipates that most homeowners age 65 and over will participate in the Stay NJ property
tax credit program. Accordingly, the State costs would be limited to providing the enhanced
benefit for tenants (estimated at $52.8 million for FY 2026) and the cost of providing the enhanced
benefit to disabled homeowners (estimated at $14.1 million). The bill does not require the
additional ANCHOR benefits to be provided in FY 2027.
The OLS anticipates that the State will achieve cost savings of $780.0 million in FY 2026,
$733.3 million in FY 2027, and $679.7 million in FY 2028 as senior citizen homeowners migrate
to the Stay NJ property tax credit program. The anticipated cost savings will be higher in FY 2026
and FY 2027 due to the shift in program participation and the phase-out of additional ANCHOR
benefits provided under the bill.
Impact on the Homestead Property Tax Reimbursement
The FY 2024 Governor’s Budget includes $186.8 million for the homestead property tax
reimbursement, an increase of 6.1 percent above FY 2023 program expenditures of $176.1 million.
Data available through the State accounting system indicates that expenditures have been about
five to 10 percent lower than program appropriations. Using budget evaluation data, the OLS
estimates that FY 2026 homestead property tax reimbursement expenditures will total $183.1
million. For purposes of this estimate, the OLS assumes a 90 percent reduction, or $164.7 million,
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