New Jersey Adopts $60.7 Billion Budget

New Jersey’s fiscal year 2027 state budget was adopted on June 30. It received generally favorable reviews from the business community and was cited as being more fiscally responsible than the budgets adopted under the previous administration. However, business groups did criticize several revenue raisers that were included. Here’s a brief summary:

Final FY27 Budget by the Numbers 

• State appropriations: $60.7 billion 
• State revenue: $59.4 billion 
• Structural imbalance: $1.35 billion 
• Surplus: $6.1 billion 
• Final spending increase from FY26 to FY27: 3.3% 
• Spending increase from budget proposed by Governor Sherrill in February to final budget in June: $15 million or 0.02% increase
• Legislative add ons: Over $200 million in FY27 and $358.8 million more in a FY26 supplemental bill.
• Sixth consecutive year of 100% pension funding

Key FY27 Revenue Raisers

• Temporary cap on net operating losses (NOLs): A temporary $1 million cap has been imposed on the use of net operating loss (NOL) deductions under corporation business tax for four years — privilege periods ending on or after July 31, 2026, but before July 31, 2030. Additionally, NOL deductions are limited further for privilege periods ending on after July 31, 2030, but before July 31, 2032. This move is estimated to raise more than $485 million in state revenue but preserves carryforward to keep taxpayers’ NOLs whole and includes a safe harbor for underpayment due to NOL change. The cap took effect immediately and applies to any privilege period ending on or after July 31, 2026.
• Medicaid assessment on employers: Employers with at least 50 employees (including their dependents) enrolled in Medicaid will have to pay an annual assessment ranging from $325 to $725 per covered employee and dependent, depending on the number on Medicaid. The law exempts seasonal, part-time, per diem and disabled employees from counting towards the assessment, but some exemptions take effect in FY28 with refunds for those that got over-assessed in FY27. The bill also prohibits employers from discriminating against applicants or employees based on their Medicaid enrollment status. These new fees are estimated to raise more than $145 million in state revenue. The assessment took effect July 1, 2026, FY27, but refunds for certain exemptions will be distributed in FY28. A snapshot of employees on Medicaid will happen on Dec. 31 every year, and the assessment notification will be sent by March 1 of each year.
• Limitations on alternative business calculation (ABC) deduction: Beginning in tax year 2026, full eligibility of the ABC adjustment is limited to taxpayers with incomes of $500,000 or less. It is reduced to 25% for taxpayers with incomes between $500,001 and $1 million, and it is eliminated for taxpayers with gross incomes exceeding $1 million. This change seeks to raise more than $120 million in state revenue. It is effective immediately and applies retroactively to taxable years beginning on or after Jan. 1, 2026.
• Data broker registration and sensitive data restrictions: Data brokers and certain data collectors are now required to register annually with the Division of Consumer Affairs. Uncertainty remains regarding the bill's definition of a data broker, and which entities would ultimately be classified as such. There are new registration fees ranging from $5,000 to $1.5 million, and the sale or licensing of sensitive personal data is prohibited. This is expected to raise more than $40 million in state revenue. It is effective immediately, with the public registry requirements becoming operative 270 days after enactment.

FY27 Tax Relief 

• Child tax credit expansion: The New Jersey child tax credit has been increased by 25% for tax years 2026 through 2028, providing up to $1,250 per child under age 6 for eligible families.
• ANCHOR program funding: The ANCHOR property tax relief program has been fully funded at $2.186 billion, maintaining homeowner and renter benefits.
• Stay NJ program changes: The Stay NJ property tax relief program was revised to include tiered benefit levels based on household income, providing up to $6,500 for eligible seniors while targeting benefits to lower- and middle-income homeowners. Eligibility for household income is reduced from $500,000 to $200,000, and the benefit ranges from $6,500 to $4,000 instead of the original $6,500 for all eligible seniors.

Learn more about the budget in our IssuesWatch Podcast episode with Chris Emigholz of the New Jersey Business & Industry Association:

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Jeffrey Kaszerman Jeff is the vice president of government relations for the NJCPA. He works with the CEO and the Board of Trustees to create and implement advocacy initiatives that protect and promote the interests of the CPA profession, the business community and the public. More content by Jeffrey Kaszerman: Decoding New Jersey’s Tax Competitiveness Midnight Madness: Unpacking New Jersey’s FY27 Budget New Jersey’s Big Plan for America’s 250th Anniversary Understanding the Surge in New Jersey Utility Rates Inside Governor Sherrill’s $60.7 Billion Proposed Budget Rebates, Reform and Reality: The State of New Jersey’s Property Taxes New Governor, New Vibe: New Jersey’s 2026 Political Outlook Bill Would Designate Accounting as STEM in New Jersey Learn more from Jeffrey Kaszerman: 10/29/26 - CPA Day at the State Capital 1/14/27 - Corporate Accounting & Finance Interest Group Meeting & Technical Session: Professional Issues Update