Why are property tax in NJ so high?According to this website: Widgets Magazine, NJ is not all that bad.
Specifically for NJ,
State Sales Tax: 7% (food, prescription drugs and non-prescription drugs, clothing, footwear exempt). Local sales taxes are imposed on sales of certain items sold in Atlantic City and Cape May County.
Gasoline Tax: 32.9 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 41.9 cents/gallon (Includes all taxes)
Cigarette Tax: $2.70/pack of 20
Personal Income Taxes
Tax Rate Range: Low – 1.4%; High – 8.97%.
Income Brackets: * Lowest – $20,000; Highest – $500,000
Number of Brackets: 6
Personal Exemptions: Single – $1,000; Married – $2,000; Dependents – $1,500
Additional Exemptions: Taxpayer or spouse 65 or older – $1,000
Standard Deduction: None
Medical/Dental Deduction: Limited to excess of 2% of gross income
Federal Income Tax Deduction: None
State Sales Tax: 4.0% (food, prescription and non-prescription drugs exempt); Other taxing entities (cities and counties) may add up to 5.00% in additional sales tax.
Gasoline Tax: 68.65 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 73.05 cents/gallon (Includes all taxes)
Cigarette Tax: $4.35/pack of 20; New York City adds an additional $1.50.
Personal Income Taxes
Tax Rate Range: Low – 4.0%; High - 8.82%. The state has enacted two new temporary income tax rates in its 2010 budget levied on the highest-income filers. For households with taxable income above $500,000, regardless of filing status, the tax rate rises to 8.97 percent from 6.85 percent; for those with taxable income below $500,000 but above $200,000 for single individuals, $250,000 for heads of households, and $300,000 for married couples filing joint returns, the rate increases to 7.85 percent from 6.85 percent. You are entitled to a household credit if you are single and have an adjusted gross income of $28,000 or less, or married with AGI of $32,000 or less.
Income Brackets: * Lowest – $8,200; Highest – $1,029,250
Number of Brackets: 8
Personal Exemptions: Single – $0; Married – $0; Dependents – $1,000
Standard Deduction: Single – $7,700; Married filing jointly – $15,000; Dependents – $3,000
Medical/Dental Deduction: Federal amount
Federal Income Tax Deduction: None
Property taxes vary by each town and by property value: you can't expect to pay $100 on $10 million mansion, right?
So, if you choose a property in a town where there is no bustling business area - such as Hillsborough, NJ or Martinsville, NJ or Brick, NJ - then expect that lack of business activity (and resulting contributions to the city's coffers in way of taxes) is absent, and it means that the residents have to shoulder the responsibility to keep their roads paved and free of snow and all the municipal functions up and running.
Its very town dependent, and some are pretty reasonable compared to other parts of the state or country.
A major use of local property tax is the public school system, which NJ ranks in the top few every year in major analyses.
Taxes also go to police etc, and crime is pretty low across the state in general, with the exception of course of some of the poorer cities, which presumably have lower property taxes, and therefore less resources to apply to policing, schools, etc. Its a well known problem.
I wouldn't suggest for a minute that NJ is a low cost place to live, but our load seems to be reasonable compared to other big, high per capita income states, with educated workforces, good schools, a broad diversified economy, and average crime rates.
No one likes paying taxes, but it could always be worse. I travel quite a bit for business and have for 30 years. People always complain about property taxes wherever they live it seems. I've known people who become so incensed with their taxes that they actually move their families in order to get "lower" property taxes, only to be deluged with enormous increases in Gas tax, or food tax, or tax on clothing, etc.
Plenty of people moved to south Florida, where gas is DOUBLE what it is in NJ due to tax burden, same with California, where property taxes are even higher. So the grass is always greener.
My only real negative feeling about property taxes in NJ is the way many of the town employees act toward the taxpayers..with resentment and downright nastiness sometimes. As though we are there to pay them personally.
But NJ does have many nice towns, where the taxes keep the roads together, schools in the top quartile in the country, local police and other emergency services employed keeping crime at bay, and maintaining many of the really nice older towns where people want to live in a community of their peers, regardless of socioeconomic strata.
All in all, having traveled around for all of my adult life, and seen what other regions are like, NJ has a ton to offer for what it costs people to live here. I wish taxes were much lower, but on balance, NJ is still a great place to live and raise a family
Disclaimers: Just for the record, I think New Jersey definitely deserves derision it receives on a lot of counts (so I am biased). It's tax structure and poorly run legislature should be chief among them. While I am admitted to practice law in New York, I no expert on New Jersey tax law. Please seek an attorney admitted to practice in New Jersey if this is more than just a generalized query.
From my lay perspective:
It has the highest effective property taxes in the U.S. (2.13% according to This article by Forbes) but those taxes are lower than property taxes in other countries (see any countries in which Vikings lived in before the 13th century). The reason you probably asked this is because you aren't seeing a break elsewhere.
Jersey, which has had centuries of graft, corruption and being the forgotten land between NYC and Philadelphia, draws most of its residents in commuter areas to those cities. Because it doesn't derive the extra city tax revenues from either, it has combated this with:
a) highest effective residential property taxes in the country (see above),
b) 5th highest state income taxes (As of 2016, but from my personal recollection, they haven't moved from 5th in a while) and
c) are tied for the 2nd highest state sales tax (again- as of 2016, though apparently Salem county is exempt from the 7%). note, NJ does apparently squeeze out of the top 5 on combined sales tax because other states allow sales tax to be conducted at the local level.
I am not an accountant or an attorney specializing in individual tax laws (if you need one, go find an attorney near you that specializes in tax), but as someone who has grown up in PA, lived in Florida (high property taxes, but 0% state income tax, and lottery revenues go to keeping State Education costs down, unlike NJ, NY and PA) and now lives in New York: Jersey, with it's decades history of crime issues in Camden and Newark that have just recently ‘subsided'... does not give us any incentive to choose the state over suburbs in PA/Delaware (Philly) or Long Island/Westchester/CT).
d) It's not like home prices are THAT much cheaper than their comps (note- NY is skewed because of everything north and west of Duchess county). I'm sure there are some redeeming qualities about New Jersey, but they aren't evident in the tax code. The crime rates aren't lower, and it's not like there is magically better winters than it's neighboring states. Given how much they take from you all, I'm not sure you are getting what you pay for relative to residents of other states.
- Unions. Not to sound political but many unions have negotiated ridiculously favorable deals with state and city governments. It is nearly impossible to fire public workers and efforts to consolidate workflow has failed. For example, police chiefs in most NJ municipalities make over $200k an year excluding benefits such as platinum health plans, lifetime salary guarantees etc... And these benefits can't be renegotiated because they were signed decades ago and courts have constantly held their provisions.
- Administrative overlap. There are state and local governments which have overlapping functions. This creates layers of expensive bureaucracy that sit around and do nothing. Towns refuse to merge together and share resources. Why would a mayor of a town purposefully want to lose his job?
- No big "cash cow". California has tech companies and New York has financial companies but New Jersey doesn't have a single isolated sector that generates a lot of revenue for the state. Most businesses are small to medium enterprises that don't generate billions in revenue. In addition a lot people who live in New Jersey commute to NY to work. As a result, NJ doesn't receive income tax on their work and this leads the state to spend less on infrastructure and the cost is directed towards city residents in the form of property taxes.
- Lack of incentives for business to relocate to NJ. For example New York offers businesses a lot of starts and tax savings to relocate but NJ is not a business friendly state. There isn't a skilled workforce due to lack of STEM based universities. Corporate taxes are too high and the courts are not business friendly. As a result the potential tax revenues that could be gained through business are redirected towards residents.
One of the major reasons is government. Elected officials, public, state, County & municipal workers, police, fire, public schools and other obscure public entities that we do not even know exist.
567 municipalities along with 21 counties where consolidation and regional governing entities could reduce the number of employees necessary to effectively run the government.
Local, County and state workers along with the aforementioned have 6 figures salaries, 6 week vacation time, sick leave and full family medical benefits. That's only part of it. When all of these workers retire they then get up to 70% of their "Last" years salary, for the rest of their lives along with their health benefits package.
For the last several years the biggest growth in new employment was in the public governmental sector and not any industrial, commercial, financial or other private business or industry.
How can the state possibly keep up with this? They can't. Property taxes are absolutely absurd and this is statewide. There are no less expensive counties or towns anywhere in the state that is excluded. A modest and basic 3 family house in the city of Newark will have an annual property tax bill of $15,000. In the suburbs a modest 3 bedroom Cape Cod style house on a 25x100 foot lot can cost as much as $17,000 in annual property taxes. The more desirable upper scale neighborhoods like Short Hills, Upper Montclair and numerous other towns, that are too many to list, have property tax bills that will absolutely shock you. These are the nicer homes with 5 bedrooms and a total of 10 plus total rooms. These Houses with appraised values, (the price the house will sell for if listed on the market), are all in the $750,000 to 2 million plus range.
Their annual tax bill is between $30,000 to $100,000 per year. That used to be a great salary in NJ not too long ago. The new Trump tax adjustment only allows up to $10,000 in tax write off.
Elect me and I will fight to cut taxes across the board! Nj needs a plan. What are our priorities? We pay high property taxes, yet the quality of our schools are subpar. We shouldnt put public school teachers out of work, but we should examine why we dont have quality public education.
I am not formulating "right wing" or "left wing" solutions. Only good, sensible solutions. We have lotteries being conducted for students to get accepted into charter schools. So, either we take note of what theyre doing right or maybe we look at what countries with the best education systems are doing. Plainly speaking, we need major education reform in this country. Most definitely at the fed level, but also, in the state level, too.
If we cant improve quality, especially in the inner cities, then we need to stop taking so much property taxes.
Its pretty much the same ballgame when it comes to most other issues as well. Its not a left/right issue. Its a problem that needs to be addressed.
One reason is that property taxes are the primary way that schools and other municipal services are funded. Due to local political tradition there are a lot of small municipalities which would either be unincorporated areas in other states or would have been part of larger town. New Jersey, at least in middle class and affluent suburbs, pays teachers, police officers, and other workers are paid better than they generally are in the rest of the country. Property taxes are generally priced at 3–4% of property values, and properties in New Jersey are among the most expensive in the country. The population is also mostly distributed in suburbs, while many states that have much higher property taxes in comparable areas (Illinois for example has much higher property taxes in the North suburbs of Chicago) are averaged down due to large rural areas with much lower property taxes.
The entire government structure state, municipality and county is by design to do one thing and one thing only, support the structure. When this becomes your primary goal, taxes must go up - never down.