Gov. Phil Murphy said he is hopeful the state’s budget “will be able to support the implementation of Stay NJ.” (Dana DiFilippo | New Jersey Monitor)
Gov. Phil Murphy signed a bill Friday making a series of technical changes to three state tax relief programs.
The bill seeks to align Stay NJ — a tax credit program that promises to cut seniors’ tax bills in half, to an indexing cap of $6,500, beginning in 2026 — with the senior freeze and Anchor property tax rebate programs.
“I am signing this bill because I believe the streamlining of Senior Freeze and Anchor will be of benefit to our seniors, and I am hopeful that the State budget will be able to support the implementation of Stay NJ,” the governor said in a statement released with the bill signing.
Among other things, the bill alters the definition of income under Stay NJ to include Social Security, retirement, and other types of income typically excluded from taxation. The changes could push some residents above Stay NJ’s $500,000 income limit.
It requires residents who receive tax relief under the three programs to reduce a property tax deduction on the state’s income tax by an amount equal to their awards and allows officials to pay out Stay NJ benefits through rebates while officials stand up a tax credit system that aligns with all three programs.
Some have doubted whether Stay NJ’s promised tax relief will ever materialize.
The program is expected to cost the state $1.2 billion annually once it is in full effect, and statutory language bars New Jersey from administering Stay NJ tax credits if the state cannot make full pension payments, fully fund school aid, and maintain a surplus equal to 12% of spending.
The spending bill Murphy signed into law in late June anticipates the state will have 10.9% of appropriations as surplus by the end of the July-to-June fiscal year and features a $2.1 billion structural deficit.
The limits are not absolute. Lawmakers overwrote Stay NJ’s surplus requirement through budget language in the current fiscal year and could do so again in the future.
“I am committed to maintaining these guardrails while working with my partners in the Legislature to achieve the goal of sustainable property tax relief for seniors,” Murphy said.
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