Governor Phil Murphy's proposed fiscal year 2026 budget introduces $1.2 billion in new or expanded taxes, affecting a wide range of New Jersey residents. The proposed taxes include "sin taxes" on online gaming, cannabis, and alcohol, an expanded sales tax rate on previously exempt activities, real estate transfer taxes, and levies on deliveries passing through New Jersey warehouses.
The proposal raises two key questions: whether the Democrat-controlled Legislature will approve these tax measures during an election year to support an outgoing governor, and what will happen to the budget if these revenue-raising measures are rejected. Michele Siekerka, President and CEO of NJBIA, expressed concerns about the consequences of rejecting the proposed taxes: “If the overspending is the same and there’s still a structural deficit that grows larger because taxes are rightfully pushed back, there will likely be a heavy draw from the state’s current surplus.” Christopher Emigholz, NJBIA Chief Government Affairs Officer, added that these proposals could harm businesses and reduce affordability for residents.
The budget suggests raising $277.1 million by expanding the sales tax base to cover various services and transactions such as participatory sports, interior design, vehicle trade-ins, digital services, second-hand airplane sales, certain complimentary meals and tickets, horse training services, and removing partial exemptions on boats. Emigholz noted that adding 6.625% to these items increases costs for consumers and businesses.
The proposal also includes significant increases in "vice" or "sin" taxes as part of its package:
- A substantial rise in internet gaming and online sports wagering tax rates from 15% to 25%
- A 500% increase in cannabis taxes
- A 30-cent per pack increase in cigarette tax
- A 10% hike in alcoholic beverage tax rates
- Higher fees for firearms and ammunition
Senators John Burzichelli (D-3) and Mike Testa (R-1) criticized doubling the tax on online sports betting: “Simply put...doubling the tax on online sports betting...is putting a New Jersey success story at significant risk.”
Another notable proposal is a $317 million increase in realty transfer fees with higher rates for property sales over $1 million. Emigholz warned this could exacerbate housing affordability issues: “Housing costs are definitely part of New Jersey’s affordability issues...and this tax goes in the opposite direction.”
Murphy also proposes a warehouse fee increased from last year's suggestion—now charging $2 per truck using a New Jersey warehouse instead of $1. Siekerka remarked: “It’s not really known who would pay the tax...but what we do know is that charge will likely filter right now to consumers.”
Emigholz highlighted potential impacts on industry growth: “New Jersey is a logistics state...this additive tax would just impede growth.”
