Republicans Pitch Plan To Uncap NJ Property Tax Deductions

NEW JERSEY — A group of Republican state lawmakers in New Jersey are pitching a plan that would give a boost to homeowners paying more than $15,000 of property taxes.

According to Sen. Joe Pennacchio (District 26) and Declan O’Scanlon (District 13), the primary sponsors of S-2279, their bill would allow New Jersey taxpayers to deduct from state income tax the entire amount of property taxes paid on their principal residence, eliminating the current $15,000 cap.

The senators said the limit for people who rent their homes – who can deduct “rent constituting property tax” of 18 percent, up to $15,000 – would also be uncapped.

It’s a break that can’t come too soon, the lawmakers argued.

A national study conducted by WalletHub last year revealed that the property taxes on a median value home in New Jersey were $2,500 more than the next highest state. In 20 years, the average property tax bill in the state has almost doubled, from $4,972 in 2002 to $9,284 in 2021.

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“For property owners who pay in excess of $15,000 each year, the cap has the effect of a tax on a tax,” said Pennacchio, who sponsored legislation in 2018 that raised the cap from $10,000 to its current level.

“They pay their property taxes, then they have to turn around and pay income tax on the same money,” Pennacchio said. “Enough already.”

“When New Jersey residents complain about the state being too expensive, they are often referring to our exorbitant property taxes,” O’Scanlon said.

“There are plenty of other taxes adding to the burden on taxpayers, but it is property taxes, the No. 1 highest property taxes in the nation, that pack the strongest punch,” O’Scanlon said. “There’s absolutely no justification for stopping families from deducting every last cent from their income taxes.”

“There has been a rallying cry in Washington to reinstate the federal cap on the SALT (state and local tax) deduction, yet New Jersey continues to cap what homeowners can deduct on an unfair and burdensome tax,” O’Scanlon added.

The bill has been referred to Senate Budget and Appropriations Committee.

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