What is Chapter 123 and the common level ratio in a New Jersey tax appeal?

"Chapter 123" refers to the 1973 law (codified at N.J.S.A. 54:1-35a and applied by N.J.S.A. 54:3-22) that standardizes how a county board tests an assessment's fairness.

The mechanics. Each municipality has an average ratio of assessed value to true value — the Director's Ratio, published annually by the Division of Taxation. The common level range is "a range which is plus or minus 15% of the average ratio" (N.J.S.A. 54:1-35a(b)). The NJ Division of Taxation guide explains: if the proof shows the ratio of the assessed value to true (market) value exceeds the common level range, "taxable value will be revised by applying the average ratio to the true value of the property."

Worked example (from the state guide). Assume the average ratio is 95.41% with an upper limit of 110% and lower limit of 81.10%. If your true value is $100,000 but you are assessed at $110,000, your ratio is 110% — at the upper limit. The board reduces taxable value to $100,000 × 95.41% = $95,410 by applying the average ratio.

Why it matters in New Jersey's appreciating market. Chapter 123 lets you win even when your home is NOT assessed above market value — it succeeds when your assessment is disproportionately high relative to neighbors (a discrimination/uniformity argument). This is often the only viable path where rising sales make a pure market-value argument hard.

The key exception: Chapter 123 does not apply in a revaluation or reassessment year, because all assessments are reset to 100% of true value, leaving no "range of permissible values" (Chapter 123 definitions).

The annual common level ranges are published by county and municipality each year by the Division of Taxation.