Why Estimated Tax Bills Are Issued in the 3rd Quarter in New Jersey
1. Timing of Municipal Budgets
• In New Jersey, municipal budgets often aren’t finalized by the third quarter (July 1–September 30) due to:
- Delays in state aid figures
- Budget hearings and revisions
- Approval processes by municipal councils and the Division of Local Government Services (DLGS)
Since the municipal tax rate (which is needed to produce final tax bills) can’t be calculated until the full budget is adopted and certified, the town must estimate the tax bill to keep essential services funded.
Legal Basis: N.J.S.A. 54:4-66.2 ("Estimated Billing Law")
This New Jersey statute requires municipalities to issue estimated tax bills when a final tax rate isn’t available in time for the third quarter.
The law states:
“If the tax rate has not been certified by the statutory deadline, the municipality shall issue estimated tax bills in the amount necessary to carry the local unit until the tax rate is certified.”
How Estimated Bills Are Calculated
1. Basis for Estimation
- Estimated bills are usually calculated based on a percentage of the prior year’s total tax levy (i.e., the total amount of taxes raised for municipal, school, and county purposes).
- Municipalities can also factor in any known or already adopted levies, such as:
- School district budgets
- Fire district budgets
- County taxes
- Any state-approved changes already finalized
2. Assessed Property Value
The estimate is then applied to the updated assessed value of each property, especially if a revaluation or reassessment has taken place.
So if your property was revalued higher, your tax bill increases proportionally—even if the tax rate has not changed.
How Payments Work
🔹 First & Second Quarters (Q1 & Q2):
- These are preliminary bills, usually based on ½ of the previous year's total tax.
- They're consistent, predictable, and not affected by new budgets or assessments.
🔸 Third Quarter (Q3):
- This is when the first payment based on the current year’s budget typically starts — even if the rate is estimated.
- The largest jump in tax bills usually happens here, especially after reassessments.
🔹 Fourth Quarter (Q4):
- Once the final budget and tax rate are certified:
- Any overpayment in Q3 is credited to Q4.
- Any underpayment in Q3 is added to Q4.
- This quarter is used to balance out the year's total tax obligation.
Important Notes
- Estimated bills are not optional for towns without a certified tax rate — it’s required to keep local government, schools, and emergency services operational.
- These bills are legally valid, and payment is mandatory, even if the rate is later adjusted.
- Third-quarter bills are never retroactively changed, but future quarters are adjusted to reflect the true annual liability.
Why This Matters to Homeowners
- You may see a big jump in Q3 — especially in a revaluation year, where your home’s assessed value increases significantly.
- Open Space taxes, fire district levies, and other fixed-rate taxes may also rise in dollar amount due to the higher assessed value, even if the rate itself stays constant.
- The Township is not overcharging intentionally — it’s a state-mandated process designed to ensure ongoing public service funding.
ESTIMATED 3RD QUARTER TAX BILL KEY POINTS:
- The reason for the estimated tax bill is because the mayor and council have not adopted the 2025 budget
- Estimated tax billing if required by law when the final budget isn’t approved on time
- The tax rate that is being used was approved by the CFO and is lower than the 2024 rate.
- We went through a full town revaluation. Even with a lower tax rate, some properties taxes will go up.
- The 4th quarter will be adjusted once the budget is adopted and the tax rate certified by the county.
- Example: Assessed property of 500,000
- 500,000 x 1.43 = 715,000
- 715,000/100=$7,150.00 yearly taxes
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