By David Engel
On February 25, 2025, Governor Phil Murphy introduced his budget for the fiscal year 2026. The new budget contains a number of new tax proposals which are summarized below.
Sales and use tax proposals.
Governor Murphy proposes to exempt certain baby products and sunscreen from the sales tax. The Governor also proposes to extend the sales tax to the following services and transactions: participatory sports, e.g., bowling, laser tag; interior design; vehicle trade-ins; digital services; second-hand airplane sales; certain complimentary meals, rooms, and tickets; and horse training. The Governor also proposes removing the partial sales tax exemption and $20,000 sales tax cap on boats or other vessels. The Governor also proposes to exempt certain baby products and sunscreen from the sales tax.
Real estate transfer tax proposals.
Governor Murphy proposes increasing the real estate transfer tax from 1% to 2% for certain real property purchases between $1 million and $2 million and to 3% for certain real property purchases in excess of $2 million.
Tobacco and vaping taxes.
The Governor is proposing a 30¢ per pack increase in the cigarette tax rate from $2.70 per pack to $3.00 per pack. Governor Murphy is proposing an increase in the liquid nicotine rate from 10¢ per mL to 30¢ per mL and the container e-liquid rate from 10% to 30%.
Alcoholic beverage taxes.
The Governor is proposing a 10% increase in the alcoholic beverage tax rates.
Gaming and sports wagering taxes.
The Governor is proposing to increase the internet gaming and online sports wagering tax rates from the current 15% and 13%, respectively, to 25%.
Other taxes.
The Governor proposes a $2 truck traffic excise fee that would be imposed on warehouses throughout New Jersey based on the number of truck trips. The proposed budget also include an excise tax on the purchase of drones, firearm sales and ammunition, an increase in the Social Equity Excise Fee (SEEF) on cannabis sold by a Class 1 license holder from $2.50 per ounce to $15 per ounce and implementation of a new $30 per ounce SEEF on intoxicating hemp products.
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