15 Jan How do I handle Senior Freeze and ANCHOR on my state return?

Q. Just received my NJ-1040 form pages. I can’t find how the Senior Freeze or ANCHOR payment affects the deduction of property tax. How do I handle this?
— Taxpayer

A. Great question.

You’re correct.

The NJ-1040 instructions are largely silent as far as the calculation of the real estate tax deduction of up to $15,000 on a taxpayer’s principal residence located in New Jersey, said Neil Becourtney, a certified public accountant and tax director with Smolin, Lupin & Co. in Red Bank.

It merely states to enter the amount of property taxes due and paid to the municipality on your main home for 2025.

In those same instructions, a long list of exempt nontaxable income is provided and an item on the list is New Jersey Property Tax Relief Benefits so clearly the receipt of either a property tax reimbursement through Senior Freeze or ANCHOR benefit is not taxable income, he said.

Becourtney points to the Division of Taxation website and a section titled “How to Determine the Amount of Property Taxes You Paid.” In that discussion, there is guidance for Senior Freeze Applicants not found in the Form NJ-1040 instructions.

“When calculating the property tax deduction or credit for tax year 2025, do not use the amount of property taxes paid for 2025,” he said.

You must use the amount reported on your Property Tax Reimbursement application as follows:
· Use the amount of your base year property taxes as reported on your 2025 Property Tax Reimbursement Application, Form PAS-1.
· First-time applicants use the amount of your 2024 property taxes as reported on your 2025 Property Tax Reimbursement Application, Form PAS-1.

“There is not similar guidance provided pertaining to recipients of ANCHOR benefits,” he said.

The website does say, though, that the ANCHOR benefit is not taxable as income.

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This story was originally published in January 2026. 

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