Murphy Signs Record-Busting Budget—With New Taxes And Tax Relief—Into Law

The new fiscal year in New Jersey is here, and with it, a new budget approved on Monday night in its final hours before the July 1 deadline to avoid a government shutdown.

Governor Phil Murphy signed the record-breaking $58.78 billion budget proposal into law as the Fiscal Year 2026 Appropriations Act. According to the governor's office, this action leaves a $6.7 billion surplus and an all-time high level of property tax relief, the most school funding in history and a fifth consecutive pension payment.

The state says more than 75 percent of the total funds are going to address these areas throughout communities across New Jersey.

"With the help of our legislative partners, we are moving New Jersey toward a brighter future for every child, student, worker, parent, and senior citizen who calls our great state home," Murphy said following the historic deal that was reached.

"This is a fiscally responsible budget that puts New Jersey families first...At a time when working people are being left behind by misguided decisions in Washington," added Senate President Nick Scutari, Senate Majority Leader M. Teresa Ruiz and Senator Paul Sarlo in a joint statement.

Across the aisle, the feelings are not as mutual.

Senator Parker Space (R-24) is calling out Democrats, saying their process lacked transparency and was filled wth last-minute pushes to drive up the state's structural deficit:

"This budget is stuffed with pork and completely ignores the needs of New Jersey families...just more reckless spending that sticks taxpayers and job creators with the bill. Once again, Republicans were shut out of the process."

Signed Into Law On Monday (Appropriations Act and Other Bills)

Tax relief: Nearly $4.3 billion in direct property tax relief for New Jersey homeowners and renters, including $2.4 million for the continuation of the ANCHOR program, $239 million to the Senior Freeze program, and $600 million in resources to significantly reduce property taxes for more than 432,000 senior homeowners through the Stay NJ program.

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.

Healthcare: $165 million for the continuation of Cover All Kids, $55.4 million for the Pharmaceutical Assistance to the Aged and Disabled (PAAD) and Senior Gold programs, $52 million for family planning services and reproductive health programs, and $35.8 million for Family Connects NJ.

Fees consumers were required to pay when they appealed an insurance carrier’s decisions under the Independent Health Care Appeals Program were permanently eliminated

Parental leave: $10 million to help state employees with full pay while they take family leave to care for a newborn, adopted or foster child.

Pension benefits: The $7.2 billion payment to the pension systems of the state fulfilled completely

School funding: $12.1 billion for K-12 schools, with any decreases from the prior year of funding to not exceed three percent in the areas of equalization, special education, security and transportation; $7.5 million for tutoring for students in need of extra academic support; funding in the form of Preschool Education Aid of $1.27 billion

NJ Transit: $788 million from the Corporate Transit Fee to improve different NJ Transit projects, including $767 million for the division to begin to fully modernize its fleet

Business innovation: Certain provisions of “New Jersey Innovation Evergreen Act” modified; New tax credits available to NJ businesses; Exemption from New Jersey gross income of certain capital gains from sale or exchange of qualified small business stock

Cigarettes: Set to be taxed at $3 per pack after a new 30-cent hike.

Vaping: Cartridges that contain vaping liquid will be taxed at 30 cents each.

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: An increase of the amount of the additional taxes and fees on certain transfers of property valued at over $2 million. The seller, rather than the buyer, is responsible for the payment of both the additional fee and the controlling interest transfer tax imposed on certain transfers of real property valued at over $1 million.

Two percent for transfers more than $2 million, but not more than $2.5 million; two and one-half percent for transfers over $2.5 million, but not more than $3 million; three percent for transfers over $3 million, but not more than $3.5 million; and three and one-half percent for transfers over $3.5 million.

In an earlier proposal, houses with sale prices of at least $1 million would have been subject to a higher rate. The current 1 percent fee on homes sold between $1 million and $2 million stays. The fee is unofficially called the "mansion tax."

Film and digital media: Eligible applicants can receive a tax credit against the Corporation Business Tax and the Gross Income Tax for qualified expenses incurred during the production of certain film and digital media content in New Jersey.

More On What Was Approved

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