New Jersey’s $56.6 Billion Budget for FY 2025: Tax Hikes, Property Tax Relief, and Investments

New Jersey Governor Phil Murphy has signed off on a $56.6 billion state budget for FY 2025, highlighting significant tax increases on large corporations and substantial investments in property tax relief, education, pensions, and community projects.

Key Highlights:

Corporate Taxes and NJ Transit Funding:

Effective July 1, a new 2.5% tax will be imposed on corporations earning over $10 million in profits, in addition to the state’s existing 9% corporate business tax. This measure is aimed at bridging NJ Transit’s nearly billion-dollar funding gap.

Property Tax Relief:

The budget introduces robust relief measures through the ANCHOR program, offering homeowners rebates up to $1,750 and renters up to $700 to ease property tax burdens. Seniors will benefit from the StayNJ program, cutting property taxes by half starting in 2026, supported by a $220 million allocation.

Education and Community Investments:

Allocations include a $7 billion pension payment for public workers, $12 billion for fully funding the public education formula, and additional funding of $20 million for community colleges and $70 million for public universities. Nursing homes will receive a $586 million increase in Medicaid funding.

Local Projects and Controversies:

Nearly $700 million in earmarked funds will finance local projects such as recreational facilities, school construction, crisis centers, and soup kitchens. The introduction of a new transit tax has sparked debate, with concerns raised by business groups over its potential impact on corporate operations within the state.

Legislative Process and Reactions:

The budget, which exceeds revenue by $2.1 billion, concluded following extensive negotiations. Criticism from Republicans centered on deficit spending, while Assembly Speaker Craig Coughlin defended the budget as fulfilling commitments made to the people of New Jersey.