Deal On New Taxes, 'Record-Breaking' NJ Budget Reached, Report Says

Lawmakers are close to a new budget deal, complete with tax increases, set to be signed before the new fiscal year begins on July 1 in New Jersey, according to NJ Advance Media.

Governor Phil Murphy's proposal includes $1.2 billion in new taxes and fees. The total budget, if approved, comes in at a record $58.1 billion for what Murphy says is part of his "ongoing and unrelenting commitment to building a New Jersey that is stronger, fairer, and more prepared for the future."

An estimated $4.3 billion in tax relief for New Jersey residents was slated in the plans while the state is currently facing a $3.7 billion budget hole, though analysts say the actual deficit is closer to the $1.2 billion that was proposed in new taxes and fees.

What Looks To Be In

An increase to taxes on cigarettes, higher-value homes and online gaming look to be on the way, according to NJ Advance Media.

• Cigarettes are set to be taxed at $3 per pack after a new 30-cent hike.
• Online sports betting and other forms of online gaming will be assessed a 20 percent tax. This is estimated to bring in an additional $322.6 million for the state.
• Luxury homes with sale prices of at least $1 million will be subject to a higher rate as well. The current 1 percent fee on homes sold between $1 million and $2 million will move to 2 percent. The fee is unofficially called the "mansion tax," and this new version would also establish a fee on properties sold for over $2 million, a three percent tax also paid by the buyer.
• Full payments on public worker pensions and New Jersey's school funding formula, and a slash of $100 million from health care costs for state workers are all included.

According to Politico, a vote was anticipated early this week ahead of the deadline on June 30 to avoid a government shutdown.

Did Not Make The Cut

Recreational taxes on activities like bowling, batting cages and laser tag (referred to as "fun taxes") are said to have not been cleared.

An estimated $277 million would be forgone from taxing these and other add-ons like go-cart racing, interior design services, horse training, vehicle trade-ins, some comped meals, tickets, hotel rooms, digital services and second-hand airplane sales.

Still Unclear

• Legislation that would absolve news media out of being required to publish legal notices for public entities
• Higher levies on marijuana
• A fee on warehouse truck traffic
• A multitude of more localized projects requested by individual lawmakers, including $30 million for Union County capital projects, $3 million for a skating rink in East Brunswick, $2 million for an Astroturf athletic field in Metuchen, $2 million for the Collingswood Grand Ballroom and more than $1 million for police athletic facilities in South Plainfield and West Orange.
• Tobacco and Vapor Products: an increase in the liquid nicotine tax rate from $0.10 per mL to $0.30 per mL and the container e-liquid rate from 10 percent to 30 percent.
• Alcoholic Beverage Tax: Tax will be enforced on quantity sold (per gallon) rather than the sales price and varies depending on the type of alcohol.
• Drones: A new excise tax on the purchase of drones — expected to raise $5 million.
• Firearms and Ammunition: Increases in firearm fees and new excise taxes on both firearms and ammunition, projected to generate $7.8 million of additional revenue.

More Taxes, Big Spending: 5 Takeaways From Murphy’s Final Budget

Paths To Tax Relief

A total of $4.3 billion for property tax relief programs, with the Stay NJ program set to start for eligible seniors in 2026, is in place under Governor Murphy's budget. This comes after another $280 million towards the fund was added to this latest proposal.

The first round of tax credits will go out in 2026 and be capped at $3,250 for the first year, with the new budget period beginning in July. More than 432,000 seniors are expected to be eligible.

While New Jerseyans continue to pay the highest property taxes in the nation, the state has funneled billions into programs like ANCHOR (Affordable New Jersey Communities for Homeowners and Renters).

The Fiscal Year 2026 budget includes money for that popular program to continue, as well as another year of Senior Freeze, the reimbursement initiative for eligible senior citizens and disabled persons to be compensated after property tax or mobile home park site fee increases on their principal residence.

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