In a candid moment, Governor Phil Murphy once remarked, “If taxes are your main concern, maybe New Jersey isn’t the state for you.”
For many residents, this statement rings truer than ever in 2025, as New Jersey continues to grapple with some of the highest taxes in the nation. With Murphy’s final budget proposal introducing a slew of new levies—dubbed the “fun tax” and others targeting everything from tires to recreational activities—it’s clear that the Garden State’s tax burden is only growing. Here’s why New Jersey’s tax policies under Murphy are pushing affordability out of reach for many.
A State Already Taxed to the Hilt
New Jersey has long held the dubious distinction of having one of the highest tax burdens in the United States. According to the Tax Foundation, New Jersey ranks among the top states for combined state and local tax burdens, with residents paying an average of 12.3% of their income in state and local taxes. Property taxes are particularly punishing, averaging around $9,500 annually, among the highest in the nation. Add to that a progressive income tax topping out at 10.75% for incomes over $1 million, a 6.625% sales tax, and a corporate business tax rate that’s one of the steepest in the country, and it’s no wonder residents feel squeezed.
Governor Murphy’s administration has leaned into this high-tax framework, arguing that it funds critical services like education, transit, and property tax relief programs such as ANCHOR and Stay NJ.
While these programs provide some relief—ANCHOR, for instance, offers rebates averaging $1,500 for homeowners—critics argue they’re a drop in the bucket compared to the overall tax load. For middle-class families, the relief often feels like a Band-Aid on a wound that keeps growing.
The 2025 Budget: Taxing Fun and More
Murphy’s proposed $58.1 billion budget for fiscal year 2026, unveiled in February 2025, has sparked outrage for its creative—and, to many, draconian—revenue-raising measures. Facing a $1.2 billion structural deficit and potential federal funding cuts, the governor has opted to target a wide range of activities and goods rather than pursue broad-based income or sales tax hikes. The result? A budget that feels like it’s taxing the very things that make life enjoyable.
The so-called “fun tax” has become a lightning rod for criticism. This proposal would slap the state’s 6.625% sales tax on a host of recreational activities previously exempt, including bowling, laser tag, go-kart racing, mini golf, batting cages, and even bungee jumping. As Assembly Majority Leader Lou Greenwald (D-Camden) put it, “Everyone who is a parent has hosted birthday parties at these places, and working families don’t deserve that.”
Local business owners, still recovering from the economic fallout of the pandemic, fear these taxes will deter customers, with one Cherry Hill bowling alley operator warning it could “drive customers away” at a time when margins are already razor-thin.
But the “fun tax” is just the tip of the iceberg. Murphy’s budget also proposes:
- Tire taxes: While not explicitly detailed in the budget, discussions around taxing vehicle-related goods, including tires, have surfaced as part of broader revenue-raising efforts, potentially adding costs for drivers.
- Increased taxes on online gaming and sports betting: Raising rates from 13-15% to 25%, expected to generate $402.4 million, though critics warn it could harm Atlantic City’s recovery.
- Higher excise taxes on cannabis and hemp: The Social Equity Excise Fee on cannabis would jump from $2.50 to $15 per ounce, with a new $30 per ounce tax on intoxicating hemp products, totaling $70 million in revenue.
- Luxury home taxes: Doubling the real estate transfer tax to 2% for properties between $1 million and $2 million, and 3% for those above $2 million, projected to yield $317 million.
- Cigarette, alcohol, and vaping tax hikes: Including a 30-cent increase per pack of cigarettes to $3.00 and a tripling of the vaping liquid tax to 30 cents per milliliter.
- A $2 truck traffic excise fee on warehouses: Aimed at mitigating the impact of new warehouse development but adding costs that could trickle down to consumers.
These measures, combined with niche proposals like taxing drones and second-hand airplane sales, paint a picture of a state desperate to plug budget holes by targeting nearly every facet of daily life. Social media platforms like X have buzzed with frustration, with users labeling the plan a “tax on fun” and quipping, “Phil Murphy wants to tax your free time.”
The Defense—and the Pushback
Murphy defends his approach as a necessary response to fiscal challenges, including a $6.3 billion surplus that could be wiped out by proposed federal Medicaid cuts.
He’s emphasized avoiding broad-based tax hikes, preserving property tax relief, and fully funding pensions and schools. “We must acknowledge—and adapt to—this uncertainty,” he said in his budget address, framing the targeted taxes as a way to maintain critical services without burdening every household.
Yet, the backlash has been bipartisan. State Senate Budget Chair Paul Sarlo (D-Bergen) called revenue raisers a “last resort,” while Republican Senator Declan O’Scanlon denounced the “fun tax” as a product of the administration’s “spending addiction.”
Even Democrats like Greenwald have expressed unease, noting that taxing family-friendly activities risks undermining the affordability narrative Murphy has championed.
On X, the NJGOP seized on the budget, tweeting, “This November, let’s elect a Republican Governor who will put TAXPAYERS FIRST!”
A Legacy of Taxation
As Murphy nears the end of his tenure, his tax policies are shaping a complex legacy. Supporters credit him with boosting property tax relief—$4.3 billion in the 2026 budget alone—and making historic investments in education and transit.
Critics, however, argue that his reliance on new and creative taxes has made New Jersey less affordable for the middle class he claims to champion. The “fun tax” and other proposals have fueled perceptions that the state is out of touch, especially at a time when inflation and high grocery prices are already straining budgets.
With lawmakers facing a June 30 deadline to finalize the budget, public hearings will likely be contentious. Some of Murphy’s proposals, like the warehouse truck tax, have failed to gain traction in the past, suggesting the “fun tax” and others may face an uphill battle. But even if some measures are scaled back, the broader trend is clear: New Jersey’s tax burden isn’t shrinking anytime soon.
The Bottom Line
Governor Murphy’s blunt assessment—that New Jersey may not be the state for tax-conscious residents—feels like an understatement in 2025. From sky-high property taxes to new levies on everything from bowling to tires, the state’s fiscal policies are hitting residents where it hurts: their wallets and their leisure time.
For families planning a weekend outing or drivers replacing tires, the message is clear: in New Jersey, even the little things come with a tax. As the budget battle heats up, one thing is certain: if taxes are your main concern, the Garden State might just price you out.
