New Jersey Lawmakers Approve Tax Hikes to Balance State Budget

Strategic Insights -

New Jersey lawmakers advanced tax hikes to balance the state's budget on Thursday, with proposals to raise fees on expensive buildings, hike cigarette and nicotine taxes, and push up tax rates on online gambling and sports betting. The approved tax hikes aim to help Governor Phil Murphy keep his pledge to pass along a $6 billion surplus to the next governor. However, Republican lawmakers expressed frustration over the budget process, citing a lack of transparency and a rushed vote.

Key Takeaways:

  • Lawmakers approved a series of tax increases, including a hike in fees on the sale of expensive buildings, a rise in cigarette and nicotine taxes, and an increase in tax rates on online gambling and sports betting.
  • The tax hikes are intended to raise $282 million in additional state revenue, with about 2-3% of home sales expected to be impacted.
  • The approved tax hikes on online gambling and sports betting represent a reduction from the governor's initial proposal to raise tax rates to 25%.
  • The change in the tax rate from 25% to 19.75% would reduce expected revenue by about $85 million.
  • Republican lawmakers expressed frustration over the budget process, citing a lack of transparency and a rushed vote, particularly noting that the full budget did not receive a vote on Thursday.
  • The proposed tax rate hike on online gambling and sports betting would bring New Jersey's rate in line with neighboring states, including New York at 51% and Pennsylvania at 36%.
  • The change in the mansion tax measure, originally proposed by Governor Murphy, was delayed by hours, with the final version allowing additional time for homes to be sold under the lower fee.
  • The approved tax hike on cigarette tax would raise the state's tax to $3 per pack, from $2.70.
  • The triple tax rates on electronic cigarette cartridges to 30 cents per milliliter were also approved.

Statistics:

  • The state's tax hikes would raise $282 million in additional state revenue.
  • About 2-3% of home sales would be impacted by the tax hikes.
  • The change in the tax rate on online gambling and sports betting from 25% to 19.75% would reduce expected revenue by about $85 million.
  • The state's cigarette tax would be raised to $3 per pack, from $2.70.
  • The tax rates on electronic cigarette cartridges would be tripled to 30 cents per milliliter.
  • The mansion tax measure would impact homes worth more than $2 million, with the fee rising for more expensive homes, climbing to 2% for homes worth between $2 million and $2.5 million, and rising by an additional half percentage point for every $500,000 in value, to a cap of 3.5% on property worth more than $3.5 million.

Sources:

  • "New Jersey lawmakers eye hiking nicotine taxes to boost revenue" by Dana DiFilippo, New Jersey Monitor (2025, June 24)
  • "New Jersey Senator proposes doubling casinos' online wager tax rates" by Dana DiFilippo, New Jersey Monitor (2024, April 1)
  • "New Jersey legislator makes pitch to raise online gambling tax rate" by Brendan McGrath, New Jersey Monitor (2024, April 1)
  • S3064, New Jersey State Legislature