New Jersey Property Tax Relief Could Break Record
If Gov. Murphy’s budget is approved, some New Jersey residents may see their state property taxes cut in half.
Headache-inducing property tax bills are nothing new for New Jersey residents. With a median amount exceeding $9,300, the Garden State is one of the most expensive states for homeowners.
That said, there are a few promising New Jersey property tax relief programs that could help New Jerseyans.
For instance, the New Jersey ANCHOR program has provided millions in relief to eligible homeowners and renters. The state’s ‘Senior Freeze’ and newly created ‘Stay NJ’ programs are geared toward older residents, with the latter designed to “cut property tax bills in half,” according to the Governor’s office.
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But a few sacrifices must be made to fund these relief programs — and the state’s millionaires could foot part of that bill. Gov. Phil Murphy’s 2026 proposal also leverages other tax increases, like higher tax rates on online gambling and even a new sales tax on drones.
Here’s more of what you need to know.
Update: This summer, Gov. Murphy signed a record-high 2026 state budget with millions in Stay NJ payouts and a new "mansion tax." For more information, check out Kiplinger's report What's Happening With the New Jersey State Budget?
‘Record high’ relief for property taxes in New Jersey
Murphy’s 2026 budget proposal promises the highest property tax assistance for New Jersey residents, with nearly $4.3 billion allocated to “Direct Property Tax Relief.”
Savings in New Jersey property taxes are allocated in the following ways:
- Over $2.4 billion is dedicated to New Jersey ANCHOR payments.
- More than $600 million to fund the Stay NJ program.
- About $239 million in funding to New Jersey’s ‘Senior Freeze’ program.
- About $1 million to support various state property tax deductions.
In total, this year’s proposal offers about $800 million more in property tax programs and deductions compared to last year’s budget. The increase may lead to added property tax payouts in 2026 to New Jersey residents.
But with the increased budget cost, something has to give. Part of that difference may be reconciled by higher-income New Jerseyans paying an increased “mansion tax” on their homes.
NJ mansion tax: Millionaires unwelcome?
New Jersey has a so-called “mansion tax” of 1%. In this case, a mansion tax is a fee that the buyer typically pays when real estate is purchased at $1 million or more.
Gov. Murphy’s 2026 budget proposal seeks to increase the New Jersey mansion tax rate to:
- 2% for properties sold between $1 million and $2 million.
- 3% for properties sold for more than $2 million.
These taxes are estimated to bring in $317 million in the year they are enacted.
So what’s the problem?
Well, the New Jersey real estate market is already tight. With some of the highest property taxes in the nation, $1 million doesn’t get you nearly as far as it does in other states with the lowest property taxes. Plus, the “1 million dollar rule” was enacted over 20 years ago. Without an inflation adjustment, more and more New Jerseyans may be subject to this tax — and the proposed increases — with each passing year.
New Jersey tax cuts and increases
Murphy’s 2026 budget proposal includes other items that affect New Jersey taxes.
- Eliminating the sales tax on sunscreen and baby products. This would make items like cribs, strollers, and car seats free of the state’s 6.625% sales tax.
- New sales taxes on previously state tax-free items. Digital services, drone purchases, and activities like bowling are a few items that would now be subject to tax. The “drone excise tax” is expected to bring in $5 million in state revenue.
- Higher tax rates on online gambling (15%) and sports wagers (13%). The tax proposal would increase both tax rates to 25%.
- Higher taxes on alcohol, vapes, and cigarettes. The alcohol tax would increase by 10%, the vape tax rate would increase by as much as 20%, and the cigarette tax would increase by 30%.
- Increased school funding. The 2026 budget proposal has a “record high” in K-12 funding, with over $12 billion allocated to schools and $1.3 billion dedicated to pre-K.
However, it’s important to note that the changes above are not guaranteed to be approved. Gov. Murphy’s budget proposal goes to state lawmakers next for consideration. Stay tuned.
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