On Tuesday, February 26, the Chamber of Commerce Southern New Jersey (CCSNJ) attended Governor Phil Murphy’s Fiscal Year 2026 Budget Address as an invited guest. 

Unfortunately, the proposed $58.1 billion budget, which is $1.5 billion more than the FY2025 budget, reflects yet another alarming shift toward higher taxes and increased financial burdens on businesses in South Jersey.

As expected, the Corporate Transit Fee returns in the FY2026 budget, which continues a 2.5 percent surcharge on the state’s largest businesses. This tax disproportionately and unfairly impacts South Jersey businesses, which are being forced to subsidize NJ TRANSIT services that their employees have very little access to through 2029.

The FY2026 budget includes a $7.2 billion allocation to the state pension system, the Governor’s fifth full pension payment during his tenure in office, and a $6.3 billion surplus.

The Administration is also proposing to expand the state’s 6.625 percent Sales and Use Tax base by taxing additional services and transactions, including:

•    Participatory sports (youth and otherwise)

•    Interior design

•    Vehicle trade-ins

•    Digital services

•    Second-hand airplane sales

•    Certain complimentary meals, rooms, and tickets

•    Horse training

•    Removal of the partial sales tax exemption and $20,000 cap on boat and vessel sales

Additionally, in his speech the Governor proposed imposing new taxes on emerging industries that are vital to South Jersey’s economy. Among these proposals is an increase in the internet gaming and online sports wagering tax rates from 15 percent and 13 percent, respectively to an exorbitant 25 percent. Given the success New Jersey has seen since embracing the sports betting industry, this move threatens to harm Atlantic City’s brick and mortar casinos, undermine one of the region’s largest economic drivers and deter future investment in the industry.

The budget also proposes a $2 truck traffic excise fee, targeting warehouses throughout New Jersey based on the number of truck trips. South Jersey, home to a growing logistics and distribution sector, will be particularly affected as businesses face yet another cost increase that will ultimately be passed down to consumers.

Another new proposal by the Governor is the introduction of an excise tax on certain unmanned aircraft systems (drones), expected to generate $5 million in revenue. This measure threatens to penalize innovation and stifles the growth of an industry that has the potential to thrive in the region, especially in Cape May County where drone research and development is prevalent and ongoing.

The Administration also proposed a significant increase the Social Equity Excise Fee (SEEF) on adult use cannabis. The fee on cannabis sold by Class 1 license holders would rise from $2.50 per ounce to $15 per ounce, while a new $30 per ounce SEEF would be applied to intoxicating hemp products. Combined these increases are expected to generate an additional $70 million in revenue, but at the expense of an industry that is still finding its footing—particularly in South Jersey where the industry has been working to establish themselves as viable economic contributors.

Finally, this budget eliminated most one-time appropriations and legislative add-ons in last year’s budget. Additionally, many formula-based and competitive statewide grant programs that have seen substantial growth in recent years are now facing reductions. These rollbacks raise concerns about the future of critical funding for businesses, nonprofits, and municipalities that rely on these resources to sustain operations.

However, in some good news, Governor Murphy proposed the creation of a manufacturing tax credit program that will help the industry expand their facilities and their workforce. The CCSNJ awaits more details on this program and will share with our members in the manufacturing community once provided.

As always, the CCSNJ will be actively engaged in the budget process. If you have a line item that was cut or reduced, or any additional input for our testimony, please contact hchebra@chambersnj.com. 

To read the CCSNJ's statement on the Governor's Budget, click here.