If you’ve ever been surprised by a sudden spike in your property tax bill during the third quarter of the year, you’re not alone. In New Jersey, many municipalities issue estimated property tax bills for the third quarter — typically covering July through September — because local budgets are often not finalized in time to issue actual bills.
Why Are Bills Estimated?
Before a town can send out final property tax bills, it must first adopt and certify its annual municipal budget. But in many cases, that process is delayed by several factors:
- Waiting on state aid figures
- Public budget hearings and revisions
- Approval from local governing bodies and the New Jersey Division of Local Government Services
Until the final budget is approved, towns cannot calculate the exact tax rate — and without a tax rate, they cannot produce an accurate bill. However, services like police, sanitation, and schools still need to be funded. To avoid any interruptions, New Jersey law requires towns to issue an estimated third-quarter bill when the budget is not finalized in time.
The legal authority for this comes from N.J.S.A. 54:4-66.2, also known as the “Estimated Billing Law.” It mandates that towns issue temporary bills to keep operations running until a final tax rate is certified.
How Are Estimated Bills Calculated?
Estimated bills are typically based on a percentage of the previous year’s total tax levy — which includes municipal, school district, and county taxes. Towns can also include any new levies that have already been adopted, such as:
- Local school budgets
- Fire district taxes
- County-level taxes
The estimated rate is then applied to your property’s assessed value. This is especially important in years when the town has gone through a full revaluation (like Jackson this year), which can significantly increase the assessed value of your home — and therefore your taxes — even if the tax rate itself has gone down.
How the Tax Billing Works
Q1 & Q2 (First Half of Year): Bills are based on 50% of the prior year’s taxes. These amounts are generally predictable and not impacted by new budget changes.
Q3 (Third Quarter): The first payment based on the new year’s tax rate — even if it’s only estimated — is due. This is usually the quarter with the most noticeable increase, particularly in years when reassessments occurred.
Q4 (Fourth Quarter): Once the final budget is adopted and the tax rate is certified by the county, any overpayment or underpayment from the third quarter is corrected. Overpayments are credited; underpayments are added to the Q4 bill.
Important Things to Know
- Estimated bills are not optional when the final tax rate isn’t available. They are a legal necessity to keep towns running.
- You must pay the estimated bill, even though the amount may be adjusted in the fourth quarter.
- The township is not overcharging you—these bills follow a state-mandated formula. Some homeowners may see increases due to higher property assessments, not higher tax rates.
A Real-Life Example
Let’s say your property was recently reassessed at $500,000, and the estimated tax rate is 1.43.
$500,000 x 1.43 = $715,000 / 100 = $7,150.00 in estimated annual taxes.
Even if this rate is lower than last year’s, your final bill could be higher simply because your property’s assessed value has increased.
In Summary
- The third-quarter bill is estimated because the 2025 municipal budget has not yet been adopted.
- The estimated rate used is lower than last year’s rate, according to the Township’s Chief Financial Officer.
- Due to the full town-wide revaluation, some homeowners will still see increases.
- The fourth-quarter bill will reflect any adjustments once the final budget is approved.
If you’re concerned about a higher-than-expected bill this summer, know that it’s part of a temporary, legally required process — not a permanent tax hike.
