More States Are Giving Property Tax Breaks to Seniors — With Savings up to $6,500
Property taxes can be a serious burden on seniors who own homes and aren’t earning as much income, but a number of states are working to lower the bills for older residents — sometimes by thousands of dollars.
New Jersey, where homeowners pay the highest property taxes in the nation, just became the latest state to announce a tax break for homeowners 65 and older. It won’t take full effect until 2026, but Gov. Phil Murphy announced a deal last week to cut property taxes for eligible homeowners by up to $6,500.
Other states including Iowa and Washington have added or increased property tax breaks for seniors in recent months.
While property taxes are generally levied by local governments, it’s common for states to provide tax breaks to seniors. According to the Institute on Taxation and Economic Policy, more than half of U.S. states have laws that can reduce what seniors owe in property taxes.
The New Jersey plan — which still needs approval from the state’s Democrat-controlled legislative bodies — is notable not only because average property taxes in the state are over $9,500 a year for single-family homes, but also due to the fact that it’s a tax credit, versus many other states which have exemptions.
Lower property taxes for seniors
The agreement in New Jersey would cut property taxes in half for seniors up to a maximum discount of $6,500, provided their income is under $500,000. Gov. Murphy said the program will be “challenging and difficult” to implement because of how much it will cost the state, but he promises to get it done. The New York Times wrote that it would be “one of the largest tax cuts in state history.”
Officials say their plan, StayNJ, will help seniors stay in their homes and their communities as they age.
But critics like Peter Chen, senior policy director at the New Jersey Policy Perspective think tank, argue that StayNJ is "highly regressive," with well-off seniors positioned to benefit more than low-income homeowners despite some modifications from earlier versions.
"An income cap at $500,000 still includes many seniors with substantial economic advantages, and tying the benefit amount to 50% of overall property tax bills continues to direct larger payments to larger homes," he wrote in a draft of Tuesday testimony to a budget committee.
The New Jersey deal is different — and bigger — than many other state's property tax exemptions, like the new Iowa tax break, which has a July 1 application deadline.
This year, seniors in Iowa can get a $3,250 reduction off the assessed value of their home for property tax calculations, and the amount will double for future years. But the amount that a homeowner would actually save would be much smaller. (The median annual property tax bill in Iowa is less than $2,000.)
Other states have raised income thresholds this year to make tax breaks available to more seniors. In Washington, Gov. Jay Inslee signed a bill in April that increased the maximum income levels to qualify for the state’s existing exemptions, as lawmakers feared that inflation adjustments to Social Security payments would push seniors’s income above the qualifying thresholds, according to the Seattle Times.
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