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 governs assessment and the underlying tax rate, not the design of separate property tax relief programs.
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. Homestead tax relief programs have used income to set rates and rebate amounts since 1990 (L. 1990, c. 61; L. 1999, c. 63; L. 2001, c. 159; L. 2004, c. 40), and this has not been successfully challenged.
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 did note one carve-out from a 1976 prior opinion: when the Homestead Credit Clause did not yet provide for differential treatment of seniors, the AG had concluded that giving an extra credit just to seniors would violate the Uniformity Clause. That problem was later fixed by amending the Constitution itself to authorize senior-specific credits. The lesson: when in doubt about whether a personal-characteristic distinction belongs in tax-credit design, look at whether the Constitution has expressly authorized it. Income-based design, the AG concluded, is authorized by the Homestead Credit Clause.

Bottom line: A-1 was constitutional, and New Jersey's whole framework of income-based homestead rebates and credits, the systems that morph into today's ANCHOR program and earlier Homestead Benefit and Homestead Rebate programs, rests on this AG opinion's interpretation of the Homestead Credit Clause.

What this means for you

If you're a New Jersey homeowner

Your property tax bill is determined by your assessed value and your municipality's tax rate. Those are uniform, every property in your municipality is taxed at the same general rate.

Your property tax relief, homestead credits and rebates that the State pays back to you, can vary based on your income, your age, and other factors, because relief programs are statutory benefits authorized by the Homestead Credit Clause, not part of the underlying tax rate. So:

• If you make over the income limit set by current statute (the limit has been adjusted over the years), you may not qualify.
• If you're a senior or disabled, you may qualify for additional benefits beyond what other homeowners get.
• The amount of credit you receive is set by the Legislature each year and can be a percentage of your taxes, a flat dollar amount, or some combination.

This isn't unconstitutional disparate treatment, the Constitution specifically authorizes it.

If you're a state legislator or staff working on property tax relief

You have wide latitude. The opinion gives the Legislature broad discretion to design homestead programs with virtually any combination of:

• Income thresholds
• Income-graduated credit rates
• Special rates for seniors, disabled, surviving spouses (these are explicitly authorized in N.J. Const. art. VIII, § 1, ¶ 5)
• Caps and minimums

What you cannot do is structure the tax itself non-uniformly. The actual property assessment and the general tax rate must remain uniform, but credits and rebates that effectively reduce a homeowner's burden can be income-conditioned and personal-characteristic-based, as long as the design fits within the Homestead Credit Clause.

If you're a municipal tax collector

The Uniformity Clause is your governing rule. Your assessment must apply the same standard of value to all real property in the district, and the general tax rate must be uniform. Homestead credits and rebates do not touch your assessments or your tax rate, they are state-level benefits separate from the local tax. Nothing in this opinion changes how you compute the tax or how you certify the rolls.

If you're challenging a state property tax program

This opinion sets the constitutional bar high. If you want to argue that an income-based homestead credit violates the Constitution, you have to either:

• Argue that the Homestead Credit Clause's "such rates and subject to such limits" language doesn't reach this particular design choice (a hard sell after this opinion); or
• Argue that the Uniformity Clause separately limits credits and rebates (an argument the AG specifically rejected).

You'll have Rubin v. Glaser and the legislative history of the 1976 Homestead Credit Clause amendment working against you.

If you're a tax-policy researcher

This opinion is the legal foundation for New Jersey's modern property-tax-relief architecture. Trace any program from L. 1990, c. 61 forward through the Homestead Rebate (Saver), Homestead Benefit, and ANCHOR programs, and you'll find income-based design choices that depend on the constitutional reading announced here.

Common questions

Q: Why doesn't using income to determine my property tax credit violate the State Constitution's Uniformity Clause?
A: Because the Uniformity Clause governs how property is assessed and taxed, every parcel must be assessed by the same standard and taxed at the same general rate. A homestead credit, by contrast, is a separate state-level benefit authorized by a different clause (the Homestead Credit Clause). The Constitution treats relief programs as flexible legislative tools, distinct from the underlying tax structure.

Q: Can the Legislature give bigger credits to seniors?
A: Yes. The Homestead Credit Clause itself authorizes "differential rebate or credit to citizens and residents who are of the age of 65 or more years," along with similar provisions for disabled people and certain surviving spouses. Senior-only differential treatment was specifically added to the Constitution to authorize this.

Q: Why was that constitutional amendment necessary if income-based treatment is okay?
A: This is the subtle distinction the AG opinion drew. The Homestead Credit Clause says the Legislature can set "rates and limits": that's broad enough to include income-based design. But before the senior-credit amendment, giving an extra credit to seniors that wasn't available to others was a personal-characteristic distinction that didn't fit within the original "rates and limits" language. To authorize that specific senior preference, the Constitution had to be amended.

Q: What if my income changes: does my homestead credit follow?
A: Yes, as designed by the current statute. Each year's statute sets income thresholds and credit rates. If your income rises above the eligibility cap, you stop qualifying; if it drops below, you may begin qualifying.

Q: Is the $250,000 cap from A-1 still the law?
A: That was the cap proposed in the 2007 bill the opinion analyzed. Income limits have been adjusted multiple times since. Check the current year's homestead-relief statute (currently the ANCHOR program) for the operative limits.

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: Yes: and it has. The Homestead Credit Clause expressly authorizes credits for "homeowners, residential tenants and net lease residential tenants." Tenant credits have been included in various incarnations of New Jersey property tax relief programs.

Q: Is this AG opinion still valid?
A: It has not been withdrawn and is consistent with the State Supreme Court's earlier reading in Rubin v. Glaser. New Jersey's continuous practice of income-based homestead credits since 1990, through Republican and Democratic legislatures, reflects continued reliance on this constitutional reading.

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 current incarnation of New Jersey's property tax relief is the ANCHOR program (Affordable New Jersey Communities for Homeowners and Renters), enacted in 2022, which builds directly on this constitutional framework. ANCHOR uses income to set benefits, includes both homeowners and renters, and provides differential amounts to seniors, all of which depend on the constitutional reading articulated in this opinion.

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