The budget process is now underway, and the state Senate’s GOP budget officer is asking the governor to clarify proposed sales taxes on digital services.
Gov. Phil Murphy’s proposed budget includes sales tax expansions to include vehicle trade-ins, boats, and other previously exempt services. Included in that bucket are “digital services,” which an Office of Legislative Services memo said could include cloud computing services, data and web hosting, and custom-made software.
State Sen. Declan O’Scanlon said the potential applicable taxes would increase the price of using computers and cell phones for New Jerseyans.
“Either the Governor thinks that New Jerseyans are too dumb to understand or too busy to care but the fact remains that he continues to find ways to exacerbate our already terrible affordability crisis with these regressive taxes that only hurt hardworking New Jerseyans trying to make ends meet,” O’Scanlon said in a release. “Non-partisan experts are raising red flags that this new tax could impact everyone with a phone or a computer and impact our [business] community—Governor, it’s time you explain this tax.”
O’Scanlon didn’t specify what nonpartisan experts have taken issue with the proposed tax on digital services.
State officials are itching for effective revenue sources as they worry federal funding may be limited under President Donald Trump.
Under the governor’s proposed fiscal year 2026 budget, spending would outpace state revenue by about $1.2 billion. In the fiscal 2025 budget, the structural deficit sits at about $1.8 billion (not including the $1.4 in additional appropriations legislators have approved since the budget passed.
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