By Speaker Craig J. Coughlin and Assembly Appropriations Chair John Burzichelli
Millions of older adults across the United States struggle to keep up with their monthly bills, with roughly 1 in 3 over the age of 65 experiencing economic insecurity. As New Jersey’s retired and aging community has grown, this year’s state budget took direct steps to address retirement security and affordability, which is top of mind among our seniors.
For so many of us, our lives are wrapped up in the communities where we’ve bought our homes, raised our families, and have become regulars at our main street small businesses. It is our firm belief, cost alone cannot be the reason people feel unable to remain within these communities, towns, and neighborhoods where they have set down life-long roots.
The Garden State isn’t just a great place to grow up but it’s a great place to retire and remain, too. To cement our commitment to our seniors, in particular those more financially vulnerable, this budget tackles our long-raised tax-friendliness issue. Keeping senior homeowners’ taxes in check and empowering their paychecks to stretch further, we fully funded the Homestead Benefit and Senior Freeze tax relief programs, as well as expanded the Homestead Benefit and Retirement Income Exclusion.
The Homestead Benefit distributes rebates in the form of credits to your municipality, which in turn lowers your property tax bill. The Senior Freeze program reimburses you for property tax increases at your principal residence. Together both of these programs have remained pillars of New Jersey’s property tax relief for seniors, and so we’ve fought for their restoration and full funding. This year we’ve contributed $560 million, meeting that commitment.
We’ve also invested $80 million to modernize the Homestead Benefit. This updates the base year on which credit is calculated, from 2006 property tax information to 2017, which is the latest year for which records are available. It’s estimated this investment will produce an average $130 in yearly property tax savings for our senior homeowners.
The Retirement Income Exclusion expansion is also a major corollary of this year’s budget. For some time it’s been clear the $100,000 income exclusion created a cliff that excluded many of New Jersey’s retired taxpayers if their income rose just $1 above the threshold. Under our expansion, 70,000 additional senior retirees making between $100,000 and up to $150,000 will begin benefitting from a partial income tax exclusion starting in the 2021 tax year.
As a snapshot of the economic significance of this: for married joint filers whose income falls between $100,000 and $125,000, 50% of pension payments and other income will be excluded. For these filers making between $125,000 and $150,000, the exclusion will be 25% of retirement income. Simply put, that’s money back in our retirees’ pockets.
In better aligning our tax relief programs with the current costs of living, we’re recognizing that our seniors, many living on a fixed income, deserve economic success. That they deserve the security of a financial cushion in order to remain in their communities to thrive and lead successful lives without feeling weighed down by their living costs. Our budget, guided by shared principles and values, takes strides toward greater affordability for everyone who lives, works, and chooses to build their life here in New Jersey.
The notion that our retirees are leaving the state in droves is conventional wisdom turned urban myth, which is contrary to the pride so many of us feel to call New Jersey home. Our budget, and through the targeted investments we have made into our senior communities, is helping change the narrative.
General Assembly Speaker Craig J. Coughlin represents the 19th Legislative District, which includes parts of Middlesex County. Assemblyman John Burzichelli, chair of the Assembly Appropriations Committee and sponsor of A-5539, represents the 3rd Legislative District, which includes parts of Cumberland, Gloucester, and Salem counties.
Read the opinion piece from Speaker Coughlin and Assemblyman Burzichelli, published online by NJ.com on August 3, 2021 here.