How StayNJ is Even More Regressive Than at First Glance

An overlooked flaw in how StayNJ interacts with other property tax credits makes the program even more regressive.

Published on Jun 24, 2024 in Tax and Budget

At first glance, StayNJ sounds like a promising initiative to help New Jersey’s senior homeowners stay in their homes. Who wouldn’t want to “cut property taxes in half for seniors”? However, the new property tax credit program disproportionately benefits the state’s wealthiest homeowners, an issue made worse by an overlooked flaw in StayNJ’s design: how it interacts with New Jersey’s two other major property tax credit programs.

In addition to the program’s high income cap of $500,000, higher benefits for more expensive homes, and the exclusion of renters, the regressive structure of StayNJ is compounded by how it interacts with ANCHOR and the Senior Freeze, resulting in even larger payments going to the highest-income households rather than the lower-income homeowners and renters who are most likely to be housing insecure.

As the newly released StayNJ Task Force Report details, the maximum property tax credit of the StayNJ, ANCHOR, and Senior Freeze programs combined is capped at half of one’s property tax bill, up to $6,500. Because the income eligibility for StayNJ ($500,000) is much higher than that of ANCHOR ($250,000) and the Senior Freeze ($150,000), the combined cap results in households having their ANCHOR and Senior Freeze benefits subtracted from their StayNJ benefit. Meanwhile, households with more than $250,000 in income would receive the full credit.

To illustrate how this works in practice, the case study below identifies how the combined cap would determine the property tax credit benefits for three hypothetical households: the Trentons, Hamiltons, and Princetons.

The Hamiltons and the Princetons, two households paying the same property tax bill but with vastly different incomes, would get different tax credit amounts from StayNJ because the program counts the Hamilton’s ANCHOR benefit against their StayNJ benefit. The higher-income Princetons would get nearly a quarter more in StayNJ benefits than the Hamiltons due to their higher income and ineligibility for ANCHOR.

The even lower-income Trentons would get dramatically less from StayNJ, both because of their lower property tax bill and the property tax credits they receive under ANCHOR and the Senior Freeze. In this scenario, the lowest-income homeowner would get nearly nine times less from StayNJ than the highest-income household, and roughly half of the total property tax credit amount from the three programs combined, with the Trentons receiving $3,500 total and the Princetons receiving $6,500 in total.

Take these examples and apply them across the state and one can see the bigger problem. Using the already regressive structure of StayNJ and subtracting out benefits from ANCHOR and the Senior Freeze results in an even more regressive program, where households with incomes higher than $250,000 receive the largest StayNJ benefits by virtue of earning too much to qualify for the state’s other property tax credits.

In a program as complex and costly as StayNJ, details matter, and the layering of StayNJ with other property tax credits tilts the tax code even more in favor of the state’s wealthiest homeowners at the expense of everyone else.

For more information on the shortcomings of StayNJ for low-income seniors and renters, see NJPP’s analysis of the program and testimony to the StayNJ Task Force.