02 Oct Do I report Stay NJ payments as income on my tax return?

Q. I expect to get a total of $6,500 from Stay NJ and ANCHOR. And now that the SALT deduction is up, I expect to itemize and deduct my $16,500 property tax bill. Am I supposed to treat the Stay NJ payment in any way, or just ignore, when I file my taxes?
— Homeowner

A. These payments are not taxable for New Jersey income tax purposes so they should not be reported on the New Jersey income tax return, the Division of Taxation says.

It’s different for federal taxes.

The IRS calls these payments “recoveries,” highlighted in IRS Publication 525.

It follows what’s called the “Tax Benefit Rule.” It says you must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit reduced your tax in the earlier year.

According to the New Jersey Society of Certified Public Accountants, ANCHOR payments should reduce the real estate tax expense taken as an itemized deduction and not reported as income.

So if you take the standard deduction, recoveries won’t affect your federal tax return. It will only matter if you end up taking the SALT deduction.

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This story was originally published in October 2025.

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