Stay NJ part III
Stay NJ part III Changes in 2026
Stay NJ part III:
This is our third video on this property tax program. Hence the title, Stay NJ part III.
In this we cover Roth Conversions, Income Cliff, and Retirement Planning Risks.
Should New Jersey residents age 65+ make near-term planning changes, like Roth conversions, based on potential changes to the Stay NJ property tax relief program?
As of mid-May 2026, proposed updates would lower the income eligibility cap from $500,000 to $250,000 and also reduce the maximum benefit from $6,500 (up to 50% of property taxes) to $4,000.. Nothing is final at the time of this recording (May 2026).
The Stay NJ income calculations are broader than NJ taxable income.
The income included in calculating the Stay NJ income cap include Social Security, certain pension and annuity income, IRA/401(k) distributions (including RMDs), and even tax-free Roth IRA distributions.
Because the Stay NJ threshold is a cliff (there is no phase-out), you have to weigh whether it’s worth it: a potentially changing annual benefit vs. long-term tax-free compounding.
And staying in control of your financial decisions (not relying on Trenton).
Key Takeaways from Stay NJ part III:
- Stay NJ eligibility rules may change as early as fiscal year 2027.
- Roth IRA distributions currently count toward Stay NJ income limits.
- The proposed Stay NJ income threshold may drop from $500,000 to $250,000.
- Retirement planning decisions should consider both long-term tax strategy AND changing state programs.
- A durable retirement plan may depend more on financial decisions YOU can control.
Stay NJ part III – Links
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Watch this episode (“The Stay NJ Program – part III”) on our YouTube Channel
Stay NJ part I
Stay NJ part II
Stay NJ part III – Transcript
(this is the full transcript for the video Stay NJ part III)
Hey, should I be making some long-term financial decisions – or financial planning changes – like, for example, Roth conversions…. based around a program, a benefit, that might change in the very near future?
I mean, it could change in, in a matter of weeks or possibly next year.
That’s exactly what we’re going to be talking about in Stay NJ part III.
Quick recap for anyone who hasn’t seen the first two videos. And we’ll link to them in the show notes as well. Stay NJ is a property tax program here in New Jersey for New Jersey residents age 65 and over.
Right now, as the program stands, the maximum benefit is up to 50% of your property taxes or $6,500 per year.
Here’s where things stand today.
….. and we’re recording this in mid-May 2026.
The income eligibility cap is proposed to be lowered from $500,000 down to $250,000.
The maximum benefit, the property tax relief, would go from $6,500 down to a maximum of $4,000.
Nothing’s final yet, but it’s something that I do think New Jersey residents 65 and over need to be aware about.
The income calculation used to determine whether you’re eligible for the Stay NJ program, is way broader than what shows up on your New Jersey State income tax return.
So what’s included in the bucket when they’re trying to determine if you’re eligible for the Stay NJ program?
Well, the first is your Social Security benefits are going to show up as income.
That’s not taxable here in New Jersey.
In fact, most states, there’s only nine of them that do tax Social Security.
The other 41, including New Jersey, do not tax your Social Security income.
But Social Security gets added back in.
Your pension income gets added back in, if it was previously excluded.
Annuity income, same thing.
If it was excluded, now it’s back in.
Your IRA distributions, 401(k) distributions…….
Of course, if you’re taking a required minimum distribution from a retirement plan, that’s also going to be included.
But here’s the one that trips a lot of people up:
Distributions from Roth IRAs get included in your income bucket.
Those are tax-free distributions.
I’m kind of surprised, and a lot of people are, too, when we point that out to them.
Roth IRA distributions get added back in when they’re trying to determine if you’re eligible for this program.
And there’s no phase-out, to this.
The income threshold is a cliff.
Basically, if you go $1 over the threshold, whether that’s $500,000 now……. or over $250,000 under the proposal……
if you go over by $1, you receive zero benefit.
So here’s the question that your financial plan needs to answer:
Is it worth structuring or avoiding a Roth, a strategy of making Roth conversions… over the next few years?
Is it worth it to do that to stay under a threshold for the Stay NJ program…… a program that might get cut in half or reduced in value, reduced in their benefits, or changed again….. in future budget cycles?
By moving money into a Roth, you may be getting 10, 20, 25 years of tax-free compounding.
You have to look at the math and just say, “Hey, is this something where this money, these dollars, can compound on a tax-free basis for 20 to 25 or- years or longer?
Is it worth it for a $6,500 tax benefit this year?”
I don’t know.
Everyone’s situation is going to be different.
And that’s really where working with a planner can come to assist you.
We’re, we’re not here to take a position on Stay NJ, whether it’s a good policy or a bad policy…..
whether the proposed changes are fair, unfair…..
what the state should or shouldn’t do regarding its budget.
What we are here to say is this:
building a long-term, permanent financial strategy around something that can change from year to year…… one that’s already being proposed, with some significant changes…..
it carries a little bit of risk!
And that’s not something that we really want to get engaged in.
As I mentioned a moment ago, everyone’s situation is going to be different.
For some households, staying under that Stay NJ threshold, it’s absolutely the right thing to do.
For others, the value of long-term compounding – without any kind of taxes getting involved may significantly outweigh any benefits that you may get from some property tax relief in 2026 or 2027 or 2028.
That’s a conversation worth having with your financial planner.
The Stay NJ program, in whatever form it takes after this fiscal year 2027 gets put into place, it could be as soon as July 1st, could be a few weeks away…. — it’s worth understanding.
And it’s worth doing some planning around.
But the most durable retirement plans are built around decisions that YOU can control, not benefits that can change in the next administration in Trenton or during the next budget cycle.
If you’d like to think through how Stay NJ fits into your broader retirement plan, including whether doing Roth conversions makes sense for you, we’re open to having that conversation with you.
There’s a link below to schedule time with our team.
Thanks for watching Stay NJ part III
