Relief From NJ Property Tax Relief

So what exactly can you expect to see in the way of property tax relief as a result of the legislation passed by the Legislature earlier this week? I've already shown that there is a very good likelyhood that homeowners will see less than the full 20% benefit (or 15% or 10% depending on your income bracket) because tax relief is capped to the first $10,000 of property taxes on the homestead.

The Division of Taxes says that the average taxpayer will see just over $1,000 ($1,051) in property tax relief once the law takes effect next year. Also, as I noted, quite a few people are going to be in for a surprise when their property tax relief isn't much of a relief at all since the property taxes are going to keep rising and quickly swallow up the relief - much as it did with the NJ SAVER program. Indeed, this new program replaces the old program such that the savings will be less - taxpayers will not have the NJ SAVER program and the new credit/rebate, but only the new program to rely upon for property tax relief.

Here's a handy dandy calculator to see what the average homeowner is currently paying in taxes by town. This chart for the North Jersey counties shows what taxpayers may expect to get - note that the result is not the maximum $2,000, $1,500, or $1,000 under the credit.

The Bergen Record also put together this handy dandy FAQ, but the key questions are as follows:

Q: How much will the credit program cost?

A: It's expected to cost at least $2.2 billion this year.

Q: Where will the money come from and who will pay for it?

A: Each time somebody buys something in New Jersey, a portion of the sales tax will go to fund the new credit. Lawmakers fought Corzine last summer over his plan to raise the sales tax from 6 cents to 7 cents. They agreed to spend half of the money raised from that increase -- roughly $1.4 billion -- on property tax relief. Another $900 million will come from the money that was spent on the Homestead rebate program.

Q: How long will the credit program last?

A: It is set for at least one year, as is the money to pay for it.

What we've got here is a combination of using one tax to pay for tax relief in another area, combined with a one-shot. This supposed tax relief may last only one year, if that. Next year's relief (tax year 2008) may end up with far less relief than 2007.