Can New Jersey legally base your property tax credit on how much money you make, or does the State Constitution require all homeowners to be treated the same regardless of income?

Plain-English summary

In 2007, Governor Corzine asked Attorney General Stuart Rabner for a constitutional opinion on Assembly Bill A-1, a sweeping property tax relief bill that would give homeowners a credit on their local property taxes equal to a percentage of those taxes (20%, 15%, or 10%), with the percentage tied to the homeowner's household income. Homeowners with more than $250,000 in income would get nothing.

Assembly Minority Leader Alex DeCroce had argued the bill was unconstitutional because the State Constitution's Uniformity Clause requires all property to be taxed at the same general rate, regardless of who owns it. The argument: scaling a property tax benefit by the owner's income is the kind of personal-characteristic distinction the Uniformity Clause prohibits.

AG Rabner disagreed. His reasoning:

1. The Uniformity Clause requires uniform assessment and a general tax rate, absent another constitutional provision permitting different treatment. The AG considered it alongside the Homestead Credit Clause and found no conflict with A-1's income-based credits.
2. The Homestead Credit Clause, N.J. Const. art. VIII, § 1, ¶ 5, gives the Legislature broad discretion to provide rebates or credits "at such rates and subject to such limits as may be provided by law." That language is intentionally open-ended.
3. Legislative history confirms it. An earlier draft of the Homestead Credit Clause would have specifically tied credits to a percentage of household income (5–10%). Drafters dropped that specific number not because they wanted to forbid income-based credits, but because they wanted the Legislature to have more flexibility to choose what factors to use over time. The constitutional text was rewritten to give the Legislature maximum flexibility, including the flexibility to use income.
4. Past practice supports it. The opinion cites statutes dating from 1990 that calculated homestead credits and rebates based on income (L. 1990, c. 61; L. 1999, c. 63; L. 2001, c. 159; L. 2004, c. 40).
5. Rubin v. Glaser (83 N.J. 299 (1980)) established that the Homestead Credit Clause "envisages vesting the Legislature with discretionary powers within the constitutional framework" and upheld a previous statute that used personal characteristics (excluding vacation homes) to limit eligibility.

The opinion also discusses a 1976 AG opinion that rejected an additional credit for seniors under the Homestead Credit Clause as it then stood. Rabner distinguished income-based credits: the clause's drafting history showed that its broad rates-and-limits language left the Legislature discretion to consider income.

The AG concluded that the questioned income-based credit provisions of A-1 were constitutional.

Currency note

This opinion was issued in 2007. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The opinion reviews a proposed 2007 bill. Check current law and Division of Taxation guidance for today's programs and eligibility rules.

Common questions

Q: Why doesn't using income to determine my property tax credit violate the State Constitution's Uniformity Clause?
A: The AG read the Uniformity Clause together with the Homestead Credit Clause. The first requires uniform property assessment and a general tax rate unless the Constitution permits otherwise; the second gives the Legislature discretion to set homestead credit rates and limits. The AG found that discretion broad enough to include household income and concluded A-1 did not violate the Uniformity Clause.

Q: Can the Legislature give bigger credits to seniors?
A: The version of the Homestead Credit Clause quoted in the opinion expressly permits a differential rebate or credit for residents age 65 or older, among others. The opinion contrasts that text with the clause considered in a 1976 AG opinion, which did not then authorize an additional senior credit.

Q: Why was that constitutional amendment necessary if income-based treatment is okay?
A: The AG said the clause considered in the 1976 opinion did not authorize extra relief based on senior status. For A-1, he found that the history of the clause's broader rates-and-limits wording preserved legislative discretion to use income when calculating credits.

Q: Did the AG decide how an individual's credit changes from year to year?
A: No. The opinion analyzes whether A-1 could use household income in its proposed credit formula. It does not explain administration of a person's credit under later law.

Q: Is the $250,000 cap from A-1 still the law?
A: The $250,000 threshold was part of the proposed 2007 bill the opinion analyzed. The opinion does not establish today's income limits; check current law.

Q: Can the Legislature exclude vacation homes from the credit?
A: Yes. Rubin v. Glaser (83 N.J. 299 (1980)) upheld exclusion of vacation homes. The Homestead Credit Clause is for the homestead, your primary residence, and the Legislature can define what counts.

Q: Could the Legislature include renters in homestead credits?
A: The Homestead Credit Clause quoted in the opinion permits a homestead statute for homeowners, residential tenants and net lease residential tenants. This opinion does not analyze a particular tenant-credit program.

Q: What did the AG conclude about A-1?
A: He concluded that its questioned income-based homestead credit provisions were constitutional under the Homestead Credit Clause and did not violate the Uniformity Clause.

Background and statutory framework

New Jersey's Constitution contains two key tax provisions:

Uniformity Clause (Article VIII, § 1, ¶ 1): "Property shall be assessed for taxation under general laws and by uniform rules. All real property assessed and taxed locally or by the State for allotment and payment to taxing districts shall be assessed according to the same standard of value… and such real property shall be taxed at the general tax rate of the taxing district…"

Homestead Credit Clause (Article VIII, § 1, ¶ 5): "The Legislature may adopt a homestead statute which entitles homeowners, residential tenants and net lease residential tenants to a rebate or a credit of a sum of money related to property taxes paid by or allocable to them at such rates and subject to such limits as may be provided by law…"

The Homestead Credit Clause was added in 1976. Its drafting history includes a critical episode: the penultimate draft would have constitutionally locked credits to "a rate not less than 5% nor more than 10% of household income." Public hearings prompted concern that this would tie the Legislature's hands. The drafters rewrote the language to be open-ended: "at such rates and subject to such limits as may be provided by law."

Assemblyman Walter E. Foran, who attended the June 1975 hearing on the revised language, explained the rationale: "[t]he passage of this resolution by both Houses of the Legislature and its subsequent adoption by the electorate would provide flexibility for the Legislature in dealing with property tax relief generally. The specific provisions of such relief would then appear in individual bills and the provisions of such bills could be altered as situations changed."

Practical effect: the Homestead Credit Clause is one of the most legislatively flexible provisions in the State Constitution.

The opinion harmonizes this with Formal Opinion 15-1976, which involved a different question: whether the Legislature could give a special homestead credit just to seniors, beyond what other homeowners received. At the time, the Homestead Credit Clause did not expressly permit a senior-only differential, and the Uniformity Clause was thought to forbid it. The fix was constitutional amendment: the Clause was later amended to expressly allow differential rebates and credits for citizens 65 and over, the disabled, and certain surviving spouses. After that amendment, Rubin v. Glaser (83 N.J. 299 (1980)) reinforced legislative discretion under the Clause.

Assembly Bill A-1 (2007), the bill the opinion analyzed, was a substantial response to New Jersey's persistently high property taxes. It paired (a) a deeply income-graduated credit at 20%/15%/10% with (b) a hard cap excluding household incomes above $250,000. The Governor wanted constitutional cover before signing. Stuart Rabner gave it.

The opinion analyzes the constitutional basis for using income in the proposed 2007 homestead credit. It does not address later property tax relief programs.

Citations and references

New Jersey Constitutional provisions:

• N.J. Const. art. VIII, § 1, ¶ 1, Uniformity Clause
• N.J. Const. art. VIII, § 1, ¶ 5: Homestead Credit Clause

Key case:

• Rubin v. Glaser, 83 N.J. 299 (1980), Legislature has discretion under the Homestead Credit Clause

Prior AG Opinion:

• Formal Opinion No. 15-1976: earlier reading of Homestead Credit Clause re: senior differentials

Source

• Original PDF: https://www.nj.gov/oag/oag/ag%20opinion%202007-2.pdf

Original opinion text

February 2, 2007

Hon. Jon S. Corzine
Governor
New Jersey Statehouse
P.O. Box 001
Trenton, New Jersey 08625-0001

Formal Opinion No. 2-2007

Re: Whether Assembly Bill No. A-1, which authorizes local property tax credits for homesteads and calculates those credits in part on household income, violates the State Constitution.

Dear Governor Corzine:

Assembly Minority Leader Alex DeCroce raised an issue as to whether Assembly Bill No. A-1, which uses a property owner's income in calculating and limiting homestead tax credits, violates the State Constitution. You referred this matter for our review. Please be advised that the Homestead Credit Clause of the State Constitution, N.J. Const. art. VIII, §1, ¶5, vests broad discretion in the Legislature to provide tax credits for homesteads "at such rates and subject to such limits as may be provided by law." In our view, this provision encompasses the authority to calculate homestead tax credits based on a property owner's income. Thus, the State Constitution does not preclude consideration of a property owner's income when calculating a tax credit for local property taxes on homesteads.

Assembly Bill No. A-1

Assembly Bill No. A-1 authorizes tax credits at rates of 20%, 15% or 10% of a homestead owner's local property taxes depending on the homestead owner's household income. Homestead owners with more than $250,000 in household income are not eligible for a tax credit. The bill is consistent with the Homestead Credit Clause, does not run afoul of the Uniformity Clause, N.J. Const. art. VIII, §1, ¶1, and is consistent with the practice since 1990 to use statutes that calculate homestead tax credits and rebates based on income. See L. 1990, c. 61; L. 1999, c. 63; L. 2001, c. 159; L. 2004, c. 40.

The Uniformity Clause

The Uniformity Clause provides, in pertinent part:

> Property shall be assessed for taxation under general laws and by uniform rules. All real property assessed and taxed locally or by the State for allotment and payment to taxing districts shall be assessed according to the same standard of value, except as otherwise permitted herein, and such real property shall be taxed at the general tax rate of the taxing district in which the property is situated, for the use of such taxing district.
> [N.J. Const. art. VIII, §1, ¶1.]

All real property must be taxed at the same general rate without consideration of the personal status of the property owner unless a constitutional provision provides otherwise.

The Homestead Credit Clause

The Homestead Credit Clause empowers the Legislature to enact legislation that provides local property tax credits or rebates for homesteads. The Clause states:

> The Legislature may adopt a homestead statute which entitles homeowners, residential tenants and net lease residential tenants to a rebate or a credit of a sum of money related to property taxes paid by or allocable to them at such rates and subject to such limits as may be provided by law. Such rebates or credits may include a differential rebate or credit to citizens and residents who are of the age of 65 or more years, or less than 65 years of age who are permanently and totally disabled according to the provisions of the Federal Social Security Act, or are 55 years of age or more and the surviving spouse of a deceased citizen or resident of this State who during his lifetime received, or who, upon the adoption of this amendment and the enactment of implementing legislation, would have been entitled to receive a rebate or credit related to property taxes.
> [N.J. Const. art. VIII, §1, ¶5.]

The Clause provides the Legislature with considerable flexibility in determining the scope of any credit or rebate authorized for homestead owners. Rubin v. Glaser, 83 N.J. 299, 303 (1980) (upholding statute excluding vacation homes from homestead rebates since "[u]nquestionably, the Constitution envisages vesting the Legislature with discretionary powers within the constitutional framework. For the Legislature 'may' adopt a homestead statute 'subject to such limits as may be provided [in the Legislature's judgment] by law.'") (quoting N.J. Const. art. VIII, §1, ¶5).

Legislative history provides insight into the scope of this Clause. The evolution of the Clause reveals that legislators considered proposing an amendment that linked the rate of homestead credits specifically to percentages of household income — similar to what Assembly Bill No. A-1 does. However, in order to provide future Legislatures greater flexibility in dealing with property tax relief, lawmakers ultimately settled on the broader language of the Homestead Credit Clause. Specifically, the penultimate draft of the Clause provided for credits or rebates "at a rate not less than 5% nor more than 10% of household income." ACR Nos. 175, 177 and 178. After commentary during public hearings that this language, if fixed in the Constitution, would unduly limit legislative flexibility in fashioning the rates and limits of homestead credits and rebates in future years, the resolution was revised. In place of language setting credits and rebates as a specific percentage of household income, the revised proposal — now codified in the Constitution — provided for credits or rebates "at such rates and subject to such limits as may be provided by law."

A hearing on the revised, and ultimately final, language was held on June 4, 1975. At the hearing, attended only by Assemblyman Walter E. Foran, he noted that

> [t]he passage of this resolution by both Houses of the Legislature and its subsequent adoption by the electorate would provide flexibility for the Legislature in dealing with property tax relief generally. The specific provisions of such relief would then appear in individual bills and the provisions of such bills could be altered as situations changed.

The legislative history thus demonstrates that the proposed Homestead Credit Clause was amended not to eliminate the Legislature's ability to base homestead credits or rebates on income, but to ensure that the Legislature had maximum flexibility to decide how to calculate such credits and rebates in future years, without being tied to specific numerical rates in the Constitution.

Formal Opinion No. 15-1976

Attorney General's Formal Opinion No. 15-1976 took a similar view about the history of the Clause. As the Opinion states:

> The history of Art. VIII, §1, par. 5 indicates an intent to use the term "rebate or credit" broadly. Earlier versions specifically limited the amount of relief that could be afforded and required that such relief be in relation to household income. S. Con. Res. 122, 140 (1974). The resolution finally adopted excluded such limitations apparently on the basis that they were too detailed and inflexible.

The Opinion next recited Assemblyman Foran's statement, excerpted above. The Opinion concluded that homestead tax relief for all citizens calculated at a particular rate fell within the meaning of the Homestead Credit Clause and was constitutional.

Formal Opinion 15-1976 went on to address whether the Clause authorized the Legislature to give senior citizens an additional homestead rebate or credit beyond that available to homestead owners generally. Implicitly recognizing that status as a senior citizen is a personal characteristic of the property owner, the Attorney General advised that the Uniformity Clause would not permit preferential treatment based on that status, absent a constitutional provision supporting such relief. Such support could not be found in the Homestead Credit Clause as it existed at that time, because that Clause allowed for tax credits or rebates for owners of homesteads without a distinction based on age. Nor could authorization for differential treatment of senior citizens be found in N.J. Const. art VIII, §1, ¶4, which authorizes the Legislature to give senior citizens special tax relief in the form of a local property tax deduction. Therefore, Formal Opinion 15-1976 concluded that the special treatment proposed for senior citizens was unconstitutional.

In contrast, the legislative history of the Homestead Credit Clause establishes that the language "at such rates and subject to such limits as may be provided by law" includes income as a factor that may be considered in calculating tax credits and rebates. Therefore, we conclude that the questioned provisions of Assembly Bill No. A-1 are constitutional.

Sincerely yours,

STUART RABNER
Attorney General of New Jersey