Increases maximum gross income tax deduction for homestead property taxes paid to $25,000.

S3261

SENATE, No. 3261

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 2, 2026

Sponsored by:

Senator� KRISTIN M. CORRADO

District 40 (Bergen, Essex and Passaic)

SYNOPSIS

���� Increases maximum gross income tax deduction for
homestead property taxes paid to $25,000.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
increasing the amount of the maximum gross income tax
deduction allowed for homestead property taxes paid, amending P.L.1996, c.60.

Whereas,

In recognition of the reality that property taxes and rents have become an
ever-increasing burden on New Jersey families; now, therefore,

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

���� 1.��� Section 3 of P.L.1996,
c.60 (C.54A:3A-17) is amended to read as follows:

���� 3.��� a. �A resident taxpayer
under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.,
shall be allowed a deduction from gross income for the amount of property tax
credit, as defined in section 1 of P.L.2018, c.11 (C.54:4-66.6), plus property
taxes paid by the resident taxpayer, the total of which shall not exceed
[
$15,000
]

$25,000
,
subject to the limitations of subsection f. of this section.� Property taxes
deductible under this section shall be due and paid for the calendar year in
which the taxes are due and payable on the taxpayer's homestead.

���� b.��� A deduction for property
taxes or property tax credits shall be allowed pursuant to this section in
relation to the amount of the property taxes or property tax credits actually
paid by a resident taxpayer who has more than one homestead, but the aggregate
amount of the property taxes or property tax credits claimed shall not exceed
the total of the proportionate amounts of property taxes paid for each
homestead for the portion of the taxable year for which the taxpayer occupied
it as the taxpayer's principal residence.

���� c.���� If title to a homestead
is held by more than one individual as joint tenants or tenants in common, each
individual shall be allowed a deduction pursuant to this section only in
relation to the individual's proportionate share of the property taxes assessed
and levied against the homestead.� The proportionate share shall be equal to
that of all other individuals who hold the title, but if the conveyance under
which the title is held provides for unequal interests therein, a taxpayer's
share of the property taxes shall be in proportion to the taxpayer's interest
in the title.

���� d.��� If title to a homestead
is held by a husband and wife who own the homestead as tenants by the entirety,
or if that husband and wife are both residential shareholders of a cooperative
or mutual housing corporation and occupy the same homestead therein, and who
elect to file separate income tax returns pursuant to the "New Jersey
Gross Income Tax Act," N.J.S.54A:1-1 et seq., that husband and wife shall
each be entitled to one-half of the deduction for property taxes for which they
may be jointly eligible pursuant to this section.

���� e.���� If the homestead is a
dwelling house consisting of more than one unit, that taxpayer shall be allowed
a deduction for property taxes or property tax credits only in relation to the
proportionate share of the property taxes assessed and levied against the
residential unit occupied by the taxpayer, as determined by the local tax
assessor.

���� f.���� Notwithstanding the
provisions of subsection a. of this section to the contrary: (1) a resident
taxpayer shall be allowed a deduction for a taxpayer's taxable year beginning
during 1996 based on 50% of the property taxes not in excess of $5,000 paid on
the taxpayer's homestead; and (2) a resident taxpayer shall be allowed a
deduction for a taxpayer's taxable year beginning during 1997 based on 75% of
the property taxes not in excess of $7,500 paid on the taxpayer's homestead.

���� g.��� Notwithstanding any
other provision of this section, the deduction allowed under this section to a
resident taxpayer eligible to receive a homestead property tax reimbursement
pursuant to P.L.1997, c.348 (C.54:4-8.67 et al.) shall not exceed that resident
taxpayer's base year property tax liability as determined pursuant to P.L.1997,
c.348 (C.54:4-8.67 et al.).

���� h.��� Notwithstanding any
other provision of this section, for the taxable year beginning January 1,
2009, a taxpayer who has gross income for the taxable year of more than
$250,000 and is not:

���� (1)�� 65 years of age or older
at the close of the taxable year; or

���� (2)�� allowed to claim a
personal deduction as a blind or disabled taxpayer pursuant to subsection (b)
of N.J.S.54A:3-1, shall not be allowed a deduction pursuant to this section;

���� provided however, the
deduction for a taxpayer who has gross income for the taxable year of more than
$150,000 but not exceeding $250,000 and is not:

���� (1)�� 65 years of age or older
at the close of the taxable year; or

���� (2)�� allowed to claim a
personal deduction as a blind or disabled taxpayer pursuant to subsection (b)
of N.J.S.54A:3-1, shall not exceed $5,000.

(cf: P.L.2024, c.88, s.22)

���� 2.��� Section 4 of P.L.1996,
c.60 (C.54A:3A-18) is amended to read as follows:

���� 4.��� a. A resident taxpayer
whose homestead is a unit of residential rental property shall be allowed a
deduction from gross income for that portion of the rent constituting property
taxes not in excess of
[
$15,000
]

$25,000
,
subject to the limitations of subsection d. of this section, due and paid for
the calendar year in which the rent constituting taxes is due and payable, for
occupancy of that homestead.

���� b.��� A husband and wife who
elect to file separate income tax returns pursuant to the "New Jersey
Gross Income Tax Act," N.J.S.54A:1-1 et seq., shall each be entitled to
one-half of the property tax deduction allowed pursuant to this section.

���� c.���� If more than one
taxpayer, other than husband and wife, qualify to deduct rent constituting
property taxes by reason of their having occupied the same rented homestead, it
shall be presumed that the deduction shall be equally divided.� A taxpayer may,
however, deduct an amount for rent constituting property taxes in the same
proportion that the rent paid by that taxpayer bears to the total rent paid by
all tenants of the same unit.

���� d.��� Notwithstanding the
provisions of subsection a. of this section to the contrary: (1) a resident
taxpayer whose homestead is a unit of residential rental property shall be
allowed a deduction for the taxpayer's taxable year beginning during 1996 based
on 50% of the rent constituting property taxes not in excess of $5,000 paid for
the occupancy of that homestead; and (2) a resident taxpayer whose homestead is
a unit of residential rental property shall be allowed a deduction for the
taxpayer's taxable year beginning during 1997 based on 75% of the rent
constituting property taxes not in excess of $7,500 paid for the occupancy of
that homestead.

(cf: P.L.2018, c.45, s.2)

���� 3.��� Section 5 of P.L.1996,
c.60 (C.54A:3A-19) is amended to read as follows:

���� 5.��� a. If a taxpayer who is
eligible for a deduction for property taxes paid under section 3 of P.L.1996,
c.60 (C.54A:3A-17) for a part of the taxable year is also eligible for a
deduction for rent constituting property taxes under section 4 of this act for a
part of the taxable year, the taxpayer shall be allowed a deduction, not in
excess of
[
$15,000
]

$25,000
,
subject to the limitations of subsection b. of this section, the amount of
which shall be equal to the sum of the amount of property tax credit, as defined
in section 1 of P.L.2018, c.11 (C.54:4-66.6), plus the amount of property taxes
due and paid for the calendar year in which the property taxes are due and
payable on a homestead that is not a unit of residential rental property and
the amount of rent constituting property taxes due and paid for the calendar
year in which the rent constituting property taxes is due and payable for the
occupancy of a homestead that is a unit of residential rental property,
provided however, that the amount of property taxes and property tax credits
shall be subject to the limitations set forth in subsections b. through e. of
section 3 of P.L.1996, c.60 (C.54A:3A-17) and the amount of rent constituting
property taxes shall be subject to the limitations set forth in subsections b.
and c. of section 4 of P.L.1996, c.60 (C.54A:3A-18) as may be applicable.

���� b.��� Notwithstanding the
provisions of subsection a. of this section to the contrary: (1) a taxpayer who
is eligible for a deduction for property taxes paid under section 3 of
P.L.1996, c.60 (C.54A:3A-17) for a part of the taxable year and is also
eligible for a deduction for rent constituting property taxes under section 4
of P.L.1996, c.60 (C.54A:3A-18) for a part of the taxable year, shall be
allowed a deduction for the taxpayer's taxable year beginning during 1996 based
on 50% of an amount not in excess of $5,000, the amount of which shall be equal
to the sum of the amount of property taxes paid on a homestead that is not a
unit of residential rental property and the amount of rent constituting
property taxes paid for the occupancy of a homestead that is a unit of
residential rental property; and (2) a taxpayer who is eligible for a deduction
for property taxes paid under section 3 of P.L.1996, c.60 (C.54A:3A-17) for a
part of the taxable year and is also eligible for a deduction for rent
constituting property taxes under section 4 of P.L.1996, c.60 (C.54A:3A-18) for
a part of the taxable year, shall be allowed a deduction for the taxpayer's
taxable year beginning during 1997 based on 75% of an amount not in excess of
$7,500, the amount of which shall be equal to the sum of the amount of property
taxes paid on a homestead that is not a unit of residential rental property and
the amount of rent constituting property taxes paid for the occupancy of a
homestead that is a unit of residential rental property.

(cf: P.L.2024, c.88, s.23)

���� 4.��� This act shall take
effect immediately.

STATEMENT

���� This bill increases the
maximum gross income tax deduction allowed for homestead property taxes paid.�
Currently, a resident taxpayer is allowed a deduction from gross income for
property taxes paid for the calendar year on the taxpayer�s principal residence
in the State, up to a maximum deduction of $15,000.� Similarly, a resident
taxpayer that rents or leases a unit of residential property that is the
taxpayer�s principal residence is allowed to deduct from gross income 18% of
the rent paid for occupancy during the taxable year, up to a maximum deduction
of $15,000 for rent constituting property taxes.� Current law also provides
that a taxpayer who is eligible for a deduction for property taxes paid for
part of the year, and also eligible for a deduction for rent constituting
property taxes paid for part of the year is allowed to deduct the sum of the
property taxes paid and the rent constituting property taxes paid, subject to
certain limitations, up to a maximum deduction of $15,000.

���� This bill raises the amount of
the maximum deduction from gross income allowed for homestead property taxes
paid in each of the three provisions to $25,000 in recognition of the reality
that property taxes and rents have become an ever-increasing burden on New
Jersey families.