Explainer: Why you haven’t seen your Homestead tax rebate lately

In 1976, as New Jersey enacted its first income tax, the state also put in place the first Homestead Rebate. The rebate is meant to provide some measure of relief from the state’s highest-in-the-nation property taxes, but it has also at times been used for political purposes.

The history: In 1975, the New Jersey Supreme Court ruled the state’s school-funding formula unconstitutional. The Legislature passed a new system, but a year later, the court halted its implementation because lawmakers had not fully funded it. They did so later that year, enacting the first income tax. Part of the income tax bill was a provision that a portion of the money raised would be returned to home owners as property-tax relief.

The income tax was wildly unpopular among residents. Gov. Brendan Byrne, up for re-election in 1977, sent out the first property-tax rebates in October of that year, a month before the election. He won a second term.

Since then, the rebate has gone through a number of iterations. Through most of its history, every homeowner got a rebate. In its heyday during the Corzine administration, all but those with the highest incomes got a relatively large rebate — more than $1,000 on average — and renters were eligible, as well.

Today: Revised by Gov. Chris Christie shortly after taking office, today the benefit is a credit on the property-tax bills for almost everyone, with only those living in a co-op or a continuing-care retirement community and those who sold their home after applying receiving a check. The number of those eligible has shrunk by more than half from 2007. About 730,000 property owners qualified to receive an average $473 credit on their property tax bill this year.

The application: It’s relatively easy to apply for the credit. The application is part of the NJ1040 income tax form. Anyone who doesn’t file a 1040 can get a specific application and file online. Or people can file by phone.

Eligibility: The eligibility criteria today are strict. A person needs to be a state resident: the home for which a person is seeking a credit needs to be the primary residence; and the person needs to have paid property taxes on that residence. Renters are no longer eligible, under changes Christie made in the program during his first year in office.

The 2014 tax credit application states, “There is no tenant rebate application available for 2014 since tenant rebates for 2009, 2010, 2011, 2012 and 2013 were suspended by the State Budget.”

To be eligible for the benefit, most New Jerseyans can have a gross income of no more than $75,000. Those age 65 and older or disabled can have as much as $150,000 in income. Those amounts are the same regardless of marital status.

How much? While the average credit given this year — it was subtracted from property tax bills last month — was $473, the actual benefit an individual received was based on: gross income, filing status, whether the owner was elderly or disabled, and the amount of property taxes paid in 2006, since it has not been updated since that year. Most homeowners with a gross income up to $50,000 and elderly and disabled owners with a gross income of $100,000 or less can get 10 percent of their 2006 taxes not to exceed $100,000. Elderly and disabled owners with an income between $100,000 and $150,000, and all other owners with an income between $50,000 and $75,000 get 5 percent of their taxes.

When: Rebates were typically given out the year after they were earned. But since taking office, Christie has twice postponed issuing the credits, due to the state’s revenue problems. The credits homeowners got last month represent the 2012 benefits. It was the first time homeowners got a credit in 20 months; the last time home owners received a credit was in 2013, months before the governor’s reelection.

With the state’s budget problems continuing, and Christie showing a willingness to delay benefit payments, it’s unclear what the future holds for the credits.