New Jersey’s Proposed “StayNJ” Tax Credit Is Not Well Designed

When designing policies to help older adults and people with disabilities on low and often fixed incomes pay property taxes, states and localities should target support to people who actually need help. Instead, many states subsidize home ownership for people over age 65 with high-paid jobs or substantial investment income. A legislative proposal under consideration in New Jersey exemplifies this type of poorly designed approach.

New Jersey Assembly Speaker Craig Coughlin and three of his colleagues have proposed a “StayNJ” tax credit that would cut in half the property taxes of New Jersey homeowners aged 65 and older, regardless of income. The credit is capped at $10,000.

The proposal as currently written is misguided for several reasons.

• It’s unnecessarily expensive. The proposal spends public money needed for Medicaid, schools, transit, public health, and other initiatives that help all residents — including older adults and people with disabilities — thrive. It allocates $1.2 billion annually to pay for the tax credit in future years, a huge sum that could be better spent.
• It’s not based on need. The proposal does not distinguish between people with high incomes and those with no income except Social Security. While the $10,000 credit cap does somewhat limit how much people with very expensive homes can receive, that limit is not enough to make the proposed credit equitable. For example, helping a disabled 85-year-old individual on a low and fixed income pay their property taxes might be a priority for New Jersey’s public resources. A $10,000 subsidy for a 65-year-old Wall Street lawyer is not.
• It leaves out renters entirely. New Jersey should strive to help all its residents stay in the state. Renters, whose incomes are much lower than homeowners on average, typically pay property taxes through their rent. By subsidizing only homeowners, the proposal would worsen existing racial and economic inequities. According to New Jersey Policy Perspective, 1 in 4 people aged 65 and over in the state rent their homes and would be left out of the proposal, including more than half of Black and Hispanic/Latinx adults aged 65 and older.

Property tax support policies should be designed for people whose property tax bill or rent exceeds a certain share of their income. (Existing policies in states vary in terms of what this threshold is and often are graduated, with lower thresholds for people with lower incomes.) This way, the support is focused on people who actually need the help.