New Jerseyans, Expect Tax Policy Changes in 2026

Listen up, New Jerseyans! If you haven’t heard yet, Governor Murphy unveiled his budget plan for 2026: a staggering $58.1 billion, the highest budget ever proposed in New Jersey’s history. To finance such a massive budget, the governor has proposed several revenue-raising measures, including tax policy changes. Some of these proposed changes may have implications for property owners. Keep reading to discover how these changes will impact residents across the Garden State.

New Jersey’s Budget Dilemma

Based on forecasted future spending, NJ is expected to increase its structural deficit by more than $3.8 billion. In fact, the Garden State’s spending is expected to surpass its revenue by an anticipated $14.8 billion under The Sweeney Center’s baseline scenario. N.J. continues to face massive deficits, fiscal experts warn • New Jersey Monitor. At this rate, it will use up its $6.2 billion surplus by 2028.

With budgetary concerns on the rise, the state will need to implement new revenue raising measures. Here are some of the proposed changes that will have tax implications.

Mansion Tax Increase

Back in September, we posted about a couple who lost their challenge to a denial of a mansion tax refund. Mansion Tax Refund Challenge Fails | MROD. The mansion tax, which is currently 1% of the total purchase price of property worth over $1 million, is expected to increase. Under the Governor’s proposed change, buyers of properties worth over $1 million and up to $2 million would incur a 2% fee. In addition, buyers of properties worth over $2 million would incur a 3% fee. Governor Murphy’s Proposed Mansion Tax Increase – Riker Danzig. All in all, many individuals purchasing high value property can expect their mansion tax to either double or triple. Given rising home prices, the proposed mansion tax increase could have an unwelcome impact on the real estate market.

Online Gaming and Sports Betting

Part of the Governor’s plan to raise funding includes raising taxes on online gaming to 25%, but not on physical casinos in Atlantic City.

Atlantic City casinos are part of a PILOT program in which they pay a percentage of their prior year’s revenue to the state instead of being taxed on the value of their property. Atlantic City Casino Property Tax Talks Delayed. The PILOT program was amended in 2021 to remove online sports wagering and gaming from the tax calculation, effectively reducing the county’s share of the funds. Unsurprisingly, Atlantic County was not happy with the amendment. Fortunately, the county has reached a settlement with the state and will receive $15 million as well as quarterly casino payments through next year. Atlantic County, N.J. reach settlement on casino tax breaks – New Jersey Globe.

For partakers of online gambling in NJ, the tax hike will likely result in increased fees from online betting companies to offset the expected loss in revenue.

Sales Tax

Part of the Governor’s proposed revenue raising measures include expanding the list of things subject to the state’s sales tax. “The state anticipates collecting $277 million by placing the state’s 6.625% sales tax on go-cart racing, laser tag, bowling, interior design services, horse training, vehicle trade-ins, some comped meals, tickets, and hotel rooms, digital services and second-hand airplane sales.” You won’t believe what N.J. is trying to tax now. Here’s the full list. – nj.com. The governor also plans on increasing the sales tax on cigarettes, alcohol, vapes, and marijuana products. Moreover, the Governor plans on repealing a partial sales tax exemption and the $20,000 sales tax cap on the sale of boats.

Property Tax Relief Programs

An estimated $4.3 billion of the proposed budget will be directed to property tax relief programs, including Stay NJ which aims to reduce the property tax bills of homeowner’s aged 65 and older by 50% with a benefit cap of $6,500. Governor Murphy proposes $58.1B state budget • New Jersey Monitor. But there’s a caveat: if the state’s surplus falls below a certain level, then the Stay NJ program must be put on hold. The Governor’s budget currently forecasts a surplus below that level, yet lawmakers are expected to greenlight the program anyway. This means that seniors should take the Stay NJ property tax relief program with a grain of salt.

Aside from Stay NJ, the proposed budget aims to fund the state’s other property tax relief programs, including the ANCHOR program which provided over $4 billion in direct property tax relief over the past two years. 2025 NJ State Budget | New Jersey League of Municipalities.

Conclusion

Funding the Governor’s proposed budget will likely subject more consumers to the state’s sales tax, remove several tax exemptions, and increase the cost of real estate transfers. Moreover, the current uncertainty with funding has many residents concerned that the state will incur a substantial deficit and fail to deliver on property tax relief. The proposed budget will still need to be approved by the state Senate and Assembly before it becomes enacted. NJ OMB – State Budget Process.

At McKirdy, Riskin, Olson, & DellaPelle, P.C., we are fully aware of the burden property owners face with high property taxes. Instead of waiting for potential tax relief programs, consider reaching out to our firm for a complimentary consultation. Our attorneys are proficient in this area of the law and will zealously advocate on your behalf to ensure that you are paying no more than your fair share.