What's Happening With the New Jersey State Budget?
The latest New Jersey tax laws include a new ‘mansion tax’ and Stay NJ payouts. Here’s what to know.
New Jersey faced a possible government shutdown if the state’s 2026 budget wasn’t signed on time. After delaying a committee vote until late June, lawmakers finally approved a 376-page spending proposal this week — which Gov. Phil Murphy signed — just in time for the new fiscal year, which begins today, on July 1.
The budget is nearly $59 billion, the largest amount ever in the state’s history. Meanwhile, increased taxes — such as the ‘mansion tax’ — may cost New Jersey homeowners more.
And while record-high spending on schools is in the budget, other programs designed to provide tax relief to older adults, such as Stay NJ, could face an uncertain future.
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So what might you expect in the New Jersey 2026 budget? Read on.
What is NJ trying to tax now?
As previously reported by Kiplinger, eligible New Jersey residents will receive property tax relief under the 2026 budget. However, a lot has changed since Gov. Murphy’s initial budget bill in February.
Here are a few of the tax increases slated in the state’s 2026 budget:
- Higher taxes on vapes and cigarettes. The vape tax rate would increase by as much as 200%, and the cigarette tax would increase by over 10%.
- Higher tax rates on online gambling (15%) and sports wagers (13%). The new state budget increases both tax rates to 19.75%, instead of Murphy’s 25%.
- Higher “millionaire’s tax” on high-value homes. (More on that below).
New Jersey ‘Millionaire mansion tax’
New Jerseyans with high-value homes didn’t get out of bill negotiations scot-free. Contained in a tangential bill was a New Jersey “mansion tax.”
- A 2% tax on properties sold between $2 million and $2.5 million.
- An additional 0.5% for every $500,000 in home value above $2.5 million.
- A 3.5% cap for homes worth $3.5 million or more.
However, sellers will pay the fee, not the buyers, which is a significant change from Gov. Murphy’s initial proposal. The change may help buyer affordability, but could harm affected sellers looking to move within or out of the Garden State.
New Jersey property tax relief: Stay NJ
Despite record spending, the governor’s office estimates that New Jersey is anticipated to end the 2026 fiscal year with a surplus of approximately $6.7 billion.
Yet that might not be enough to fund Stay NJ — a new property tax program for older adults that is expected to pay out every year.
- The new budget sets aside $600 million for Stay NJ payouts in 2026.
- However, this amount has been accumulated in three years.
- This means the next governor will need to find an additional $600 million in one year to keep the program funded for 2027, which may be a hard task, considering the uncertain future of federal funding.
New Jersey governor election: Budget woes?
Since Gov. Murphy is not eligible for a third term, a new governor will be elected this fall.
According to a press release, Murphy “inherited a $409 million surplus from his predecessor…[and] will leave his successor with a surplus 16 times greater than that amount.”
However, that might not be enough for the new governor during an unusual tax year.
The GOP-controlled U.S. Congress is currently considering major tax cuts in funding for state programs, like Medicaid. Like many other states, New Jersey is expected to be affected by variability in this funding, with the state’s Department of Human Services predicting a $3.6 billion annual cost to Garden State Medicaid programs.
In addition, New Jersey’s new budget is expected to have a nearly $1.5 billion structural deficit, per the New Jersey Office of Legislative Services (OLS). All these budget woes could prove challenging for the new governor come election time.
Keep informed and stay tuned for more updates.
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