New Jerseyans worried about a higher federal tax bill next year, thanks to the GOP’s tax overhaul, may get the chance to pay less if they pay up now.
Gov. Chris Christie Wednesday signed an executive order requiring cities and towns across the state to allow residents to pay next year’s property taxes through Dec. 31.
The federal tax law taking effect Monday caps state and local income and property tax deductions at $10,000. Previously, there was no limit.
That means residents accustomed to writing off their pricey property tax bills on their federal returns may no longer enjoy that benefit starting next year.
In a state with notoriously high property taxes and some of the richest counties in the U.S., that change could have a major impact on a large number of New Jerseyans.
“It could affect someone who has more than one home, such as a Shore home,” said Michael Cerra, deputy executive director of the New Jersey League of Municipalities. “It could also affect commercial properties, small businesses.”
Some residents have been rushing to pay their 2018 property taxes in advance, hoping to deduct as much as they can this calendar year before the new rules limiting deductions kick in.
More than 1,400 residents in Hoboken have prepaid next year’s property taxes, the Associated Press reported. Typically, only 100 or 200 residents pay early.
“I’ve been getting at least 10 to 15 of these calls or emails a day,” said Jeffrey Barnett, a certified public accountant in Marlton, Burlington County.
He said many residents — for example, those who pay the alternative minimum tax — do not benefit from paying next year’s taxes ahead of time.
On Wednesday afternoon, the IRS said taxpayers would only be allowed to deduct prepaid 2018 property taxes if their local tax authority had already sent them an assessment of how much they owe.
But for those who do benefit from sending a check to their local government before the ball drops in Times Square, Barnett said the clock is winding down.
“Everybody’s kind of looking at what they can do now that they’re not going to be able to do next year,” he said.