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S 1394

Provides for the review of unfunded mandates

2025 Regular Session Introduced by Patricia Canzoneri-Fitzpatrick and 2 co-sponsors

Raises rent-constituting property taxes from 18% to 30% of rent for principal residence, keeps $15,000 deduction cap, and increases refundable credit from $50 to $250 for renters.

REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
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WeVote Research Nonpartisan
Bill Summary · S 1394

Summary — S.1394: Provides for the review of unfunded mandates (amendments to Property Tax Deduction Act)

Note: The primary substantive text in the provided documents amends New Jersey’s Property Tax Deduction Act (N.J.S.A.54A:3A‑15 et seq.) to change how renters claim a property‑tax equivalent on their State gross income tax returns. Some documents in the packet include unrelated material and inconsistent sponsor listings; this summary focuses on the New Jersey bill language and official committee/fiscal documents provided.

Main purpose

Amend the State Gross Income Tax rules to increase the amount of rent that may be treated as the rental equivalent of property taxes for income tax deduction purposes and to raise the alternate refundable credit available to some taxpayers who choose a credit instead of the deduction. The intent is to provide additional tax relief to renters.

Key provisions

  • Increase the statutory definition of “rent constituting property taxes” from 18% of rent paid to 30% of rent paid for the taxpayer’s principal residence (residential rental units and manufactured homes in mobile home parks included).
  • Maintain the existing cap that allows a taxpayer to deduct up to $15,000 from gross income for property taxes (or the rental equivalent).
  • Increase the alternate property tax credit (elective, in lieu of the deduction) from $50 to $250. The credit is available to:
    • State gross income taxpayers, and
    • Residents age 65+ or who are blind/disabled and are not subject to gross income tax (claim via application).
  • Effective date: the bill states it takes effect immediately and applies to taxable years ending after the date of enactment (per introduced/reprint language).

Fiscal impact (Office of Legislative Services estimate)

  • Annual State revenue reduction to the Property Tax Relief Fund estimated between $115.6 million and $210.3 million beginning FY2026 and each year thereafter.
  • Basis and assumptions:
    • ~1.24 million renter‑occupied housing units in NJ (2023 ACS).
    • Current deductible “rent constituting property taxes” totals roughly $4.7 billion; under 30% formula this would be ~ $8.0 billion (an increase of ~$3.3 billion).
    • OLS assumes ~1.05 million renter households will benefit more from the larger deduction; ~191,000 lower‑rent households (monthly rent < $1,000) will likely elect the increased $250 credit.
    • Revenue loss range reflects applying marginal tax rates between 3.5% and 6.37% across renter income distribution.

Who is affected

  • Primary beneficiaries: renters who occupy a unit as their principal residence (including manufactured homes in parks). The change increases the deductible amount for most renters and provides a larger refundable credit option for certain low‑rent or non‑taxpaying residents.
  • Fiscal effect: reduces deposits to the Property Tax Relief Fund, affecting State finances and potentially budget allocations tied to that fund.

Procedural / timeline notes

  • Committee action: Reported out of the Senate Community and Urban Affairs Committee with amendments on 12/05/2024 (committee amendment included raising the credit to $250).
  • Fiscal estimate dated 01/22/2025 (OLS).
  • Multiple entries in the provided action history list various referrals and hearings (some entries and sponsor lists appear inconsistent or from other jurisdictions). The header supplied indicates status: “REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS” (1/9/2025). The bill’s text indicates immediate effect on enactment for taxable years ending after enactment.

Additional notes / caveats

  • Documents included an unrelated Massachusetts docket and a sponsor list that appears to contain federal legislators — these are inconsistent with the New Jersey statute language and likely reflect file compilation errors. The summary above relies on the New Jersey bill text, committee statement, and the OLS fiscal estimate.

Compiled from official sources — confirm details with the bill’s official record.

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