From Mansion Sales To Baby Shampoo: How Tax Bills May Affect You

Lawmakers stood firm against Governor Phil Murphy’s call for fees on recreational activities such as bowling and batting practice, which critics had called a “fun tax.” Still, legislation heading to a full legislative vote on June 30 means that New Jerseyans likely will pay more taxes on real estate, tobacco and online gambling to fuel Murphy’s proposed $58.1 billion spending plan. It’s not clear how much revenue the higher taxes would contribute, but the total is unlikely to bridge a roughly $1 billion budget gap. One bright spot as the budget and related legislation heads to the floor: savings on baby items.

Here’s a rundown of new tax legislation:

Baby bargains

New Jersey long ago stopped taxing baby food, formula and diapers. That list would expand to include infant-specific soap, shampoo, lotion, powder, funnels, nursing bottles, nipples, cribs, strollers and car seats. Those items now are taxed at 6.625%.

Everyone – with or without babies – would get a break on one necessity: Sunscreen would go tax-free starting in October. 

In all, New Jersey would lose an estimated $7.5 million in annual revenue because of the exemptions contained in S4658/A5806.

– Justus Wilhoit

Mansion tax

Bill S4666 would boost New Jersey’s so-called mansion tax. It also would change current law to compel the seller, and not the buyer, to pay a 1% fee and any commercial transfer tax on property sold for more than $1 million.

Murphy had called for mansion-tax increases to help close an estimated $1.2 billion gap in his proposed $58.1 billion budget for the fiscal year that starts on July 1. One proposal was to double the tax on $1 million purchases to 2%. A tax of 4% would apply to transactions above $2 million.

Instead, the Senate Budget committee sent an amended version to the full legislature. 

For transactions of $2 million-$2.49 million, the fee would be 2%. From $2.5 million-$2.99 million, the fee would be 2.5%. From $3 million-$3.49 million, the fee would be 3%. Above $3.5 million, the fee would be 3.5%.

“The scenario that we came up with I do believe is much much better than was introduced in the governor’s budget,” said Senator Paul Sarlo, a Democrat from Wood-Ridge who chairs the committee. 

New Jersey Realtors, a lobbying group, had said the new rates would add $10,000 to $40,000 or more to high-price transactions. But Douglas Tomson, the group’s chief executive officer, said the amended legislation wasn’t so drastic.

“The way we’re looking at the numbers, it’s only 2 percent of properties that are affected,” Tomson said.

– Madison Miller

Tobacco and nicotine

Starting Aug. 1, cigarette sales taxes would increase to $3 from $2.70 per pack of 20. 

Liquid nicotine cartridges, for vaping, would be taxed three times higher – at 30 cents per milliliter – for wholesale and retail. Bottled smoking fluid, now taxed at 10% of the retail price, would be taxed at 30%.

The increases were in bills S4659 and S4661.

Eric Blomgren, the executive director of the New Jersey Gasoline, C-Store & Automotive Association, said higher such taxes in the past cut into members’ business.

The bill “adds an incentive for people to go out of state to make their purchases,” Blomgren told the Senate Budget committee.

– Cora LeCates

Sports betting and online gambling

S3064/A5803 would boost taxes on online betting. Currently, internet casino bets are taxed at 15%. Internet sports bets are taxed at 13% and the fantasy sports operating fee is 10.5%. Starting July 1, all the rates would be 19.75%. 

Some said the bill could have a negative impact on Atlantic City casinos.

“Atlantic City is kind of the powerhouse of South Jersey, and we don’t want to do anything to impact their competitiveness,” Hillary Chebra, from the South Jersey Chamber of Commerce, told the Senate Budget committee.

The bill, though, exempts brick-and-mortar casinos from the rate changes.

– Madison Miller