Provides refundable gross income tax credit for early principal payments on certain home mortgages.

A4122

ASSEMBLY, No. 4122

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 19, 2026

Sponsored by:

Assemblywoman� CAROL A. MURPHY

District 7 (Burlington)

SYNOPSIS

���� Provides refundable gross income tax credit for early
principal payments on certain home mortgages.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act

providing a credit under the New Jersey gross
income tax for early payments of principal on certain home mortgages, and
supplementing Title 54A of the New Jersey Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� a.�� A taxpayer shall be
allowed a credit against the tax otherwise due for the taxable year under the �New
Jersey Gross Income Tax Act,� N.J.S.54A:1-1 et seq., in an amount equal to 50
percent of the excess home mortgage principal payments made during the taxable
year on the taxpayer�s principal residence in this State, which credit amount
shall not exceed $1,000 for a taxable year.

���� b.��� As used in this section:

���� �Acquisition indebtedness�
means indebtedness which is incurred in acquiring, constructing, or
substantially improving the principal residence of the taxpayer that is secured
by that residence; and shall include indebtedness secured by that residence
resulting from the refinancing of indebtedness that was incurred in acquiring,
constructing, or substantially improving the principal residence of the
taxpayer; but only to the extent the amount of the indebtedness resulting from
the refinancing does not exceed the amount of the refinanced indebtedness.

���� �Excess home mortgage
principal payments� means, with respect to qualified home mortgage indebtedness
for any taxable year, the excess of:

���� (1)�� the aggregate amount of
principal paid by the taxpayer with respect to such indebtedness during the
taxable year; over

���� (2)�� the aggregate amount of
principal which would have been paid by the taxpayer with respect to such
indebtedness during such taxable year if the taxpayer had timely made each
required payment under the terms of the indebtedness during such taxable year
(and no other payments).

���� �Homestead� has the same
meaning as �homestead� as defined in section 2 of P.L.1996, c.60 (C.54A:3A-16).

���� �Principal residence� means a
homestead actually and continually occupied by a taxpayer as the taxpayer's
permanent residence, as distinguished from a vacation home, property owned and
rented or offered for rent by the taxpayer, and other secondary real property
holdings.

���� �Qualified home mortgage
indebtedness� means acquisition indebtedness if:

���� (1)�� the residence with
respect to such acquisition indebtedness is the primary residence of the
taxpayer; and

���� (2)�� the indebtedness
constitutes a traditional mortgage.

���� �Traditional mortgage� means
indebtedness:

���� (1)�� the term of which is not
less than 15 years and not more than 30 years; and

���� (2)�� the required payments
under which are each the same amount and made in equal intervals during the
term of the indebtedness (or if any payment is required at a different
interval, the amount of such payment is adjusted in the same proportion as the
change in interval).

���� c.���� The amount of the
credit allowed pursuant to this section shall be applied against the tax
otherwise due under N.J.S.54A:1-1 et seq., after all other credits and
payments.� If the credit exceeds the amount of tax otherwise due, that amount
of excess shall be an overpayment for the purposes of N.J.S.54A:9-7; provided
however, that subsection (f) of N.J.S.54A:9-7 shall not apply.

���� d.��� Notwithstanding the
annual maximum credit amount of $1,000 provided for in subsection a. of this
section for a taxable year:

���� (1)�� a taxpayer who files for
gross income tax purposes as an unmarried individual, who has more than $125,000
of taxable income for the taxable year, before the allowance of any exemptions,
deductions, credits, or exclusions, but not exceeding $135,000 for the taxable
year, before the allowance of any exemptions, deductions, credits, or
exclusions shall determine the taxpayer�s annual maximum credit amount allowed pursuant
to subsection a. of this section by reducing that amount by 10 percent for each
$1,000 of taxable income exceeding $125,000, but not exceeding $135,000; and

���� (2)�� taxpayers who file for
gross income tax purposes as married individuals filing a joint return, who have
more than $250,000 of taxable income for the taxable year, before the allowance
of any exemptions, deductions, credits, or exclusions, but not exceeding $270,000
for the taxable year, before the allowance of any exemptions, deductions,
credits, or exclusions shall determine the taxpayer�s annual maximum credit
amount allowed pursuant to subsection a. of this section by reducing that
amount by 20 percent for each $2,000 of taxable income exceeding $250,000, but
not exceeding $270,000.

���� e.���� Married individuals
filing separately for gross income tax purposes for a taxable year shall not be
allowed a credit pursuant to this section.

���� f.���� No taxpayer shall be
allowed a credit pursuant to this section after the taxpayer, including as a married
individual filing a joint return, has been allowed a credit pursuant to this
section for any ten preceding taxable years.

���� 2.��� Notwithstanding any
provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the Director
of the Division of Taxation, Department of the Treasury, may adopt immediately
upon filing with the Office of Administrative Law such regulations as the director
deems necessary to implement the provisions of this act, which shall be
effective for a period not to exceed 360 days following enactment of P.L.��� �,
c.� ��(C.������ �) (pending before the Legislature as this bill) and may
thereafter be amended, adopted or readopted by the director in accordance with
the requirements of P.L.1968, c.410.� The regulations may include directions
for persons engaged in a trade or business who receive from any individual
interest aggregating $600 or more for any calendar year on any mortgage, who
are required by law to report to the Secretary of the Treasury, and to provide
to mortgagors, through information returns, mortgage interest payments from
individuals, to include on the information returns and provide to mortgagors
the amount of excess home mortgage principal payments received for any calendar
year.

���� 3.��� This act shall take
effect immediately and shall apply to taxable years beginning on or after
January 1 next following the date of enactment.

STATEMENT

���� This bill provides for a
refundable gross income tax credit for 50 percent of early home mortgage
principal payments that taxpayers make in addition to their required monthly
mortgage payments.� Extra payments made in addition to home mortgage required
monthly payments are required to be credited as a payment on the principal amount
of the mortgage loan amount.� The annual refundable tax credit is allowed up to
$1,000 per year and can be claimed for up to 10 taxable years.� This bill is
modeled on federal legislation referred to as the Building Equity for the
American Middle-Class Act (BEAM Act) that will encourage families to build
equity in their home, pay down their home mortgage more quickly, thus creating
more wealth while securing the American dream of homeownership.� This bill will
provide a gross income tax break that rewards middle class families that chose
to more quickly pay down the principal amounts of their home mortgages.

���� Mortgages eligible for this
tax credit are purchase money mortgages or refinanced purchase money mortgages
that must: (1) be for a primary residence, (2) be for a term between 15 and 30
years, and (3) require payments that are each the same amount and made in equal
intervals during the term of the mortgage.� The $1,000 limit on the amount of
the credit phases down for single taxpayers who have taxable income between
$125,000 and $135,000 and for married individuals filing jointly who have
taxable income between $250,000 and $270,000.� No credit is allowed for single
taxpayers with taxable income over $135,000 and for married individuals filing
jointly with taxable income over $270,000.� Married individuals must file a
joint return to claim the credit.�