Lawmakers are making a bipartisan push to amp up a tax deduction for renters.
The Senate Community and Urban Affairs Committee on Monday unanimously approved a bill increasing the amount of rent residents can deduct from their taxes.
“Everyone focuses on property tax relief for homeowners,” said Assemblyman Chris DePhillips (R-Bergen), the bill’s chief Assembly sponsor. “We should also focus on property tax relief for tenants.”
Under existing law, New Jersey’s renters can deduct 18% of their annual rent payments from their tax bill. The measure advanced in the Senate Monday would increase that to 30%, up to a cap of $15,000.
DePhillips said his caucus estimates the measure would net a family living in a two-bedroom apartment a deduction of roughly $5,600, an increase of more than $2,000 from the current level.
“Obviously, in today’s environment, we want to make sure we’re trying to promote a more affordable New Jersey, that we don’t exclude renters from that conversation and the elevation of the amount that renters can use as an income tax deduction is reflective of that,” said Sen. Troy Singleton (D-Burlington), the bill’s Senate sponsor.
Democrats have returned to Trenton from an extended break with what they say is a renewed focus on affordability after losing seven legislative seats after last month’s elections.
In a fiscal note, the Office of Legislative Services forecasts the increased deduction would cost the state between $83 million and $131 million in lost revenue, though OLS notes the pandemic’s impact on the rental market could put the bill’s cost outside those bounds.
The assemblyman doesn’t view that price tag as much of a hurdle.
“The cost is there, but we do have federal stimulus money available,” he said. “We have federal COVID relief money available.”
The bill appears unlikely to face any meaningful resistance on its path to Gov. Phil Murphy’s desk, though DePhillips said he has yet to speak with Democratic legislative leaders about its advancement. He said he wants to see it on the agenda for the Assembly’s Dec. 16 session.
For that to happen, the measure will first need to clear the Assembly State and Local Government Committee. That panel is set to meet Thursday.