In polls New Jerseyans often list property taxes among their biggest concerns. New Jersey has the highest per capita property taxes in the nation; second highest as a percentage of income. However, the State itself does not receive nor does it levy the local property taxes. Each of New Jersey's 566 municipalities must determine and collect its own property taxes. (When local and state taxes are combined, New Jersey's burden ranks 14th in the country for 2005.)

The three main fiscal components of residential property taxes in New Jersey are school district budgets, municipal budgets, and county government expenses. Property taxes are levied based on market value of real property, called an "ad valorem" tax. Each municipality figures its total need amount (after state aid and other sources of income,) then divides it by the total assessed value of its property to determine the tax rate. The value of each property is then multiplied by this rate to establish the amount of tax due by each property owner. When a statewide income tax was instituted in 1976, a property tax rebate was included in the package. Rebate programs have changed scope and value over the years but have come to be expected by many homeowners as an offset to rising property taxes. New Jersey's current property tax rebate program is the FAIR (Fair And Immediate Relief) Program, which combined the Homestead rebate and the SAVER rebate programs in 2004.

Besides the high cost, concerns about property taxes include:

• Reliance on property taxes are viewed as a reason for increasing sprawl, as towns try to increase the ratables in their tax base through development. Commercial and industrial development are viewed as more desirable than residential, particularly low-density housing; residential development adds people who require services which the school district and municipality must finance.
  
  
• Property taxes are seen as a regressive tax, as opposed to income taxes which are progressive.
  
  
• Property valuations are perceived as inconsistent within and between municipalities. Values are often not kept current, causing further disparity between property tax bills.
  
  
• Rebates feel gimmicky to many, are of insufficient value to provide real relief, and do not solve the problems with the system.