S 2025

SENATE, No. 2025
STATE OF NEW JERSEY
222nd LEGISLATURE
�
PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION
Sponsored by:
Senator VINCENT J. POLISTINA
District 2 (Atlantic)
SYNOPSIS
���� Increases gross income tax relief based on rent
constituting property taxes for residential tenants and establishes refundable
gross income tax credit in place of gross income tax deduction for residential
tenants.
CURRENT VERSION OF TEXT
���� Introduced Pending Technical Review by Legislative
Counsel.
��
An Act increasing property tax relief for tenants under the
New Jersey gross income tax, amending P.L.1996, c.60.
���� Be It
Enacted by the Senate and General Assembly of
the State of New Jersey:
���� 1.� Section 2 of P.L.1996,
c.60 (C.54A:3A-16) is amended to read as follows:
���� 2.��� As used in this act:
���� "Condominium" means
the form of real property ownership provided for under the "Condominium
Act," P.L.1969, c.257 (C.46:8B-1 et seq.).
� "Continuing care retirement
community" means a residential facility primarily for retired persons
where lodging and nursing, medical or other health related services at the same
or another location are provided as continuing care to an individual pursuant
to an agreement effective for the life of the individual or for a period
greater than one year, including mutually terminable contracts, and in
consideration of the payment of an entrance fee with or without other periodic
charges.
���� "Cooperative" means
a housing corporation or association which entitles the holder of a share or
membership interest thereof to possess and occupy for dwelling purposes a
house, apartment, manufactured or mobile home or other unit of housing owned or
leased by the corporation or association, or to lease or purchase a unit of
housing constructed or to be constructed by the corporation or association.
���� "Dwelling house"
means any residential property assessed as real property which consists of not
more than four units, of which not more than one may be used for commercial
purposes, but shall not include a unit in a condominium, cooperative, horizontal
property regime or mutual housing corporation.
���� "Homestead" means:
���� a.���� a dwelling house and
the land on which that dwelling house is located which constitutes the place of
the taxpayer's domicile and is owned and used by the taxpayer as the taxpayer's
principal residence;
���� b.� a dwelling house situated
on land owned by a person other than the taxpayer which constitutes the place
of the taxpayer's domicile and is owned and used by the taxpayer as the
taxpayer's principal residence;
���� c.� a condominium unit or a
unit in a horizontal property regime or a continuing care retirement community
which constitutes the place of the taxpayer's domicile and is owned and used by
the taxpayer as the taxpayer's principal residence.
���� In addition to the generally
accepted meaning of owned or ownership, a homestead shall be deemed to be owned
by a person if that person is a tenant for life or a tenant under a lease for
99 years or more, is entitled to and actually takes possession of the homestead
under an executory contract for the sale thereof or under an agreement with a
lending institution which holds title as security for a loan, or is a resident
of a continuing care retirement community pursuant to a contract for continuing
care for the life of that person which requires the resident to bear,
separately from any other charges, the proportionate share of property taxes
attributable to the unit that the resident occupies;
���� d.� a unit in a cooperative or
mutual housing corporation which constitutes the place of domicile of a
residential shareholder or lessee therein, or of a lessee or shareholder who is
not a residential shareholder therein, which is used by the taxpayer as the
taxpayer's principal residence; and
���� e.� a unit of residential
rental property, which unit constitutes the place of the taxpayer's domicile
and is used by the taxpayer as the taxpayer's principal residence.
���� "Horizontal property
regime" means the form of real property ownership provided for under the
"Horizontal Property Act," P.L.1963, c.168 (C.46:8A-1 et seq.).
� "Mutual housing
corporation" means a corporation not-for-profit, incorporated under the
laws of this State on a mutual or cooperative basis within the scope of section
607 of the Lanham Act (National Defense Housing), Pub.L.849, 76th Congress (42
U.S.C.1521 et seq.), as amended, which acquired a National Defense Housing
Project pursuant to that act.
���� "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.
���� "Property taxes"
means payments to municipalities for which an assessment by a municipality has
been made on an ad valorem basis on both land and improvements, and shall not
include payments made in lieu of taxes.
���� "Rent constituting
property taxes" means [18%] 30 percent
of the rent paid by the taxpayer for occupancy during the taxable year of a
unit of residential rental property which the taxpayer occupies as a principal
residence; notwithstanding the definition of "property taxes" herein,
rent constituting property taxes includes the rent paid for the occupancy of a
manufactured home installed in a mobile home park.
���� "Residential rental
property" means:
���� a.� any building or structure
or complex of buildings or structures in which dwelling units are rented or
leased or offered for rental or lease for residential purposes;
���� b.� a rooming house, hotel or
motel, if the rooms constituting the homestead are equipped with kitchen and
bathroom facilities; and
���� c.� any building or structure
or complex of buildings or structures constructed under the following sections
of the National Housing Act (Pub.L.73-479) as amended and supplemented:�
section 202, Housing Act of 1959 (Pub.L.86-372) and as subsequently amended,
section 231, Housing Act of 1959.
���� "Residential shareholder
in a cooperative or mutual housing corporation" means a tenant or holder
of a membership interest in that cooperative or corporation, whose residential
unit therein constitutes the tenant's or holder's domicile and principal
residence, and who may deduct real property taxes for purposes of federal
income tax pursuant to section 216 of the federal Internal Revenue Code of
1986, 26 U.S.C.216.
(cf: P.L.1996, c.60, s.2)
���� 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]
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 that portion of the rent constituting property taxes not in
excess of $15,000, 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]
tax credit allowed pursuant to this section.
���� c.� If more than one taxpayer,
other than husband and wife, qualify [to
deduct]
for a credit for rent constituting property taxes by reason of their
having occupied the same rented homestead, it shall be presumed that the [deduction] credit
shall be equally divided.� A taxpayer may, however, [deduct an] apply a
credit 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.]
(Deleted by amendment, P.L.��� , c.�� ) (pending before the Legislature as
this bill)
(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 under section 3 of [this act] P.L.1996,
c.60 (C.54A:3A-17) for a part of the taxable year is also eligible for a [deduction] tax credit
for rent constituting property taxes under section 4 of [this act] P.L.1996,
c.60 (C.54A:3A-18) for a part of the taxable year, the taxpayer shall be
allowed a deduction, not in excess of $15,000, [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 a tax credit for 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 a tax credit for 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 under section 3 of this act for a part of
the taxable year and is also eligible for a deduction for rent constituting
property taxes under section 4 of this act 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 under section 3 of this act for a part of the
taxable year and is also eligible for a deduction for rent constituting
property taxes under section 4 of this act 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.]
(Deleted by amendment, P.L.��� , c.�� ) (pending before the Legislature as
this bill)
(cf: P.L.2018, c.45, s.3)
���� 4.� Section 6 of P.L.1996,
c.60 (C.54A:3A-20) is amended to read as follows:
���� 6.� a.� (1) Notwithstanding
any provision of [this
act]
P.L.1996, c.60 (C.54A:3A-15 et al.) to the contrary, commencing with the
taxpayer's taxable year beginning on or after January 1, 1996:
���� (a) a taxpayer; or
���� (b) a resident of this State
who is 65 years of age or older at the close of the taxable year or who is
allowed to claim a personal deduction as a blind or disabled taxpayer pursuant
to subsection b. of N.J.S.54A:3-1 but who, pursuant to N.J.S.54A:2-4,� is not
subject to tax; and,
���� who paid property taxes [or rent
constituting property taxes]
on a homestead during the calendar year may elect to take a credit instead of
the deduction provided pursuant to section 3 of P.L.1996, c.60 (C.54A:3A-17),
[4, or
5] in
the amount of $50[,
subject to the provisions of paragraph (2) of this subsection].
���� (2)� [Notwithstanding
the provisions of paragraph (1) of this subsection, the amount of tax liability
reduction or credit allowed for the taxpayer's taxable year beginning during
1996 shall be $25 and the amount of tax liability reduction or credit allowed
for the taxpayer's taxable year beginning during 1997 shall be $37.50.] (Deleted
by amendment, P.L.��� , c.�� ) (pending before the Legislature as this bill)
���� 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 credit allowed pursuant to subsection a. of this section.
���� c.� The credit shall be paid
to the taxpayer as a refund of overpayment pursuant to N.J.S.54A:9-7, provided
however, that subsection (f) of that section shall not apply.� The credit for a
claimant qualified under subsection a. of this section who, pursuant to
N.J.S.54A:2-4,� is not subject to tax,� shall be applied for annually on an
application as shall be made available by the director, to be filed with the
director on or before the date for filing annual gross income tax returns.� The
director shall determine the form and manner by which a qualified applicant
shall apply for a refund of an overpayment pursuant to this section, and the
time of the refund of the overpayment.� For the purposes of this section,
refunds of overpayments may be combined with payments of rebates pursuant to
P.L.1990, c.61 (C.54:4-8.57 et seq.).
(cf: P.L.1996, c.60, s.6)
���� 5.��� This act shall take
effect immediately but shall first apply to the taxable year next following the
date of enactment.
STATEMENT
���� This bill increases tax relief
under the New Jersey gross income tax for residential tenants.� The bill provides income tax relief for tenants by increasing, from
18 percent to 30 percent, the amount of rent defined as �rent constituting
property taxes�.� The bill also changes the gross income tax deduction
for residential tenants to a refundable gross income tax credit of up to
$15,000 for �rent constituting property taxes.�
���� Increasing the cap on the
amount of rental payments defined as �rent constituting property taxes� and
allowing that amount to be a refundable tax credit of up to $15,000 will reduce
residential tenants� tax burdens.