New Business Tax Will Raise $789M For NJ Transit, Latest Budget Shows

NEWARK, NJ — A controversial new business tax has made its first appearance in NJ Transit’s annual spending plan.

The NJ Transit board of directors gave a green light to a $3.16 billion operating budget for fiscal year 2026 last week. The board also approved $1.7 billion in capital funding.

Notably, the agency is now including the revenue from a “corporate transit fee” that was approved in New Jersey last year. Business that that earn more than $10 million per year are subject to an extra 2.5 percent surcharge, in addition to other taxes.

Supporters of the new surcharge said that only the largest corporations in the state will be impacted, many of which don’t even have a headquarters in New Jersey. But critics argued that the tax will lead to job losses if big businesses decide to pack up their bags and leave.

• See Related: Tax Corporations, Fund Trains: Shoving Match Intensifies In New Jersey

The new tax – which expires in 2029 – is intended to help NJ Transit balance its budget. Officials estimated that the surcharge will create a regular funding source of roughly $1 billion per year for the cash-strapped transportation agency, which recently hiked its fares for bus and train riders.

NJ Transit’s 2026 budget includes $789 million in revenue from the new corporate transit fee.

“Thanks to Gov. Murphy’s support, NJ Transit has the funding it needs to maintain its critical transportation services,” board chair Fran O’Connor said.

• See Related: Murphy Signs Record-Busting Budget—With New Taxes And Tax Relief

Other highlights from the agency’s latest budget include:

REVENUE – “Thirty-one percent of the revenue in the FY 2026 operating budget comes from customer fares. The remaining amount comes from dedicated funding from the New Jersey Turnpike Authority, which is $470 million in FY 2026, $789 million from the corporate transit fee and a combination of commercial revenue and state and federal resources.”

OPERATING BUDGET – “Approximately 60 percent of the operating budget is dedicated to costs associated with labor that supports a workforce of approximately 12,000 employees. Expenses including materials, fuel and power, utilities, and outside services represent 22 percent of the total operating expenses. Contracted transportation services, such as Access Link, private carrier buses and Hudson-Bergen Light Rail (HBLR) and River LINE operation and maintenance represent 10.6 percent of total operating expenses.”

CAPITAL FUNDING – “This year’s Fiscal Year 2026 Capital Funding Appropriation totals $1.684 billion and represents an expected funding source that will provide, along with other past and future annual appropriations, the funds needed to advance critical capital projects. The Capital Funding Appropriation is funded from a number of sources: $768 million from the Federal Transit Administration (FTA), $75 million in flexed funds from the Federal Highway Administration (FHWA) provided through the New Jersey Department of Transportation (DOT), $767 million from the New Jersey Transportation Trust Fund (TTF), and $74 million of Casino Revenue, Local Match, and Turnpike Authority funds.”

According to NJ Transit, the agency partners with all 21 New Jersey counties to fund community transportation programs. The list of allocations this year includes:

• $46.1 million from the New Jersey Casino Revenue Fund to operate the statewide Senior Citizen and Disabled Resident Transportation Assistance Program (SCDRTAP).
• $13.9 million for Federal Transit Administration (FTA) Section 5310 “Enhanced Mobility of Seniors and Individuals with Disabilities” programs, which provide federal funds for operating expenses as well as the purchase of vehicles and related equipment by private, non-profit agencies, and designated public entities. This includes $2.8 million in state funding to support local matching fund requirements.
• $7.8 million for FTA Section 5311 “Formula Grants for Rural Areas” programs, which provide federal funds for capital, administrative, and operating assistance for public transportation services in and between small urban and rural areas of New Jersey. This includes $2 million in state funding to support local matching fund requirements.
• $175,240 in federal funding for the FTA Section 5311(b)(3) Rural Transit Assistance Program, which provides training and technical assistance for small transit operators receiving funding through NJ TRANSIT’s Local Programs.
• $1.02 million for FTA Section 5311 Rural Intercity Bus Transportation Program.
• $5.5 million for the New Jersey Jobs Access and Reverse Commute (NJ-JARC) Program under which counties and localities provide public transportation services to help residents obtain community transportation to employment opportunities.
• $6 million in other funds passed through to sub-recipients.

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