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NJ Poised to Raise Sales Tax on Cigarettes and Vapes in 2026 Budget

the staff of the Ridgewood blog

TRENTON, NJ — As New Jersey lawmakers finalize the $58.1 billion state budget for fiscal year 2026 — the largest in state history — one controversial item appears to be making its way into the final cut: increased sales taxes on cigarettes, vaping products, and internet gaming.

Governor Phil Murphy’s proposed budget, originally unveiled in February, called for a combination of expanded tax exemptions and targeted tax hikes, aimed at bolstering revenue while providing some financial relief to families.

🚬 What’s Included: Cigarette & Vape Tax Hikes

Among the most significant proposed tax increases are those on tobacco and vaping products:

  • Cigarettes: Tax to rise from $2.70 to $3.00 per pack (20 cigarettes) starting August 1, 2025

  • Liquid nicotine: Tax to increase from $0.10 to $0.30 per fluid milliliter

  • E-liquid containers: Retail tax to rise from 10% to 30% of sale price

The cigarette and vaping tax increases alone are expected to generate $69 million in new revenue.

đź’» Online Gaming & Sports Betting Tax Changes

Another major revenue stream under review:

  • Internet casino gaming tax: Increasing from 15% to 30%

  • Internet sports wagering tax: Increasing from 13% to 30%

These changes reflect New Jersey’s ongoing effort to regulate and profit from its thriving online gambling industry.

🍼 What’s Exempt: Baby Items & Sunscreen

On the flip side, the budget includes new tax exemptions for essential household items:

  • Baby products no longer subject to sales tax:

    • Cribs

    • Car seats

    • Nursing bottles and nipples

    • Baby soap, shampoo, lotion, and powder

    • Strollers and child restraint systems

  • Sunscreen products (FDA-regulated creams, sprays, lotions, and gels) will also be tax-exempt, provided they are specifically formulated to protect against UV radiation.

Note: Cosmetics or beauty products labeled as “sunscreen” but used primarily for appearance enhancement will not be included in the exemption.

🏛️ What’s Off the Table?

While originally floated in early budget discussions, the following items do not appear in current legislative committee bills:

  • No tax hike on alcohol

  • No expanded tax on recreational activities (e.g., bowling, laser tag, go-karting)

⏳ Budget Deadline Approaching

The New Jersey Legislature has until Monday, June 30 to pass the state budget and send it to Governor Murphy’s desk. To avoid a government shutdown, it must be signed into law before midnight.

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7 thoughts on “NJ Poised to Raise Sales Tax on Cigarettes and Vapes in 2026 Budget

  1. Hey Mr Beaver teeth wall street wiz… how about cutting spending

    1. Maybe the $$ will be used wisely instead of causing bankruptcy in a few years.

      1. Not a chance. they spend spend spend

  2. $58.1 Billion? This state does not have a revenue problem. THAT’s a lot of revenue. We have a deep-seated spending problem that can only be addressed at the voting booth. NJ, please, wake up.

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  3. They shouldn’t make cigarettes 10 bucks a back, so that money cost towards the people that are getting sick. How about that?

    1. It’s hard to imagine what that even means. I read it a few times, changed a few words, typos (?), and still don’t get it.

    2. Many people enjoy a smoke while they’re drinking!

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