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As the deadline for the adoption of the state’s new budget looms, the public is getting a clearer picture of what parts of Gov. Phil Murphy’s $58.1 billion proposed spending plan — the highest in New Jersey’s history — have made the final cut.
In the governor’s proposed budget, which was unveiled in February, he called for sales tax reforms, including both expanded sales taxes and new tax exemptions.
Murphy’s proposed exemptions included a variety of baby items, such as cribs, car seats, bottles and strollers.
But the sales tax increases proposed in Murphy’s budget were far more varied. The governor proposed increases on internet gaming and sports wager tax rates were included in the spending plan, as was an adjustment to the tax rate on assessments of real propoerty.
Murphy also proposed hiking taxes on cigarettes, vaping and alcohol would go up to 30 cents, 30% and 10% respectively — an effort projected to deliver revenue of $69 million.
Murphy also proposed taxing several activities currently not taxed, including laser tag, bowling, go-kart racing and other recreational opportunities.
What tax hikes and exemptions will be included in the final NJ budget?
Bills scheduled for consideration in legislative budget committee hearings on June 27 indicate that at least a few of those tax exemptions and tax increases could still be included in the state budget for fiscal year 2027.
There are no bills on the agenda that indicate an increase in tax on alcohol or recreational activities.
Proposed legislation would increase both the internet casino gaming tax and the internet sports wagering tax, from 15% and 13% respectively, to 30%.
That legislation would also hike the tax rate from $2.70 per pack of 20 cigarettes to $3 per pack of 20 cigarettes; that rate hike would take effect Aug. 1. The tax on liquid nicotine would increase from $0.10 per fluid milliliter to $0.30 and the container e-liquid tax would increase from 10% to 30% of the listed retail sale price, effective Aug. 1.
There is also a bill to address a few exemptions. Certain baby products such as baby wash or soap, baby shampoos, baby lotions, baby powders, child restraint systems, cribs, nursing bottles, nipples, funnels and strollers would no longer be taxed.
Sunscreen would also be sales tax exempt, specifically a lotion, cream, spray or gel regulated by the federal Food and Drug Administration that is primarily used for purposes of absorbing, reflecting, or scattering ultraviolet radiation and preventing sunburn or any sun-related skin damage.
This would not include products like cosmetics, cleansers or others that alter appearance.
What comes next?
It remains to be seen which other line items will be included in the fiscal year 2026 budget, which will run from July 1 through June 30, 2026.
The Legislature has until Monday to pass the bill and send it to Murphy’s desk. It must be signed by 11:59 p.m. Monday to avoid a government shutdown.
Katie Sobko covers the New Jersey Statehouse. Email: sobko@northjersey.com
