Parents and students expecting to get a break on New Jersey’s sales tax on back-to-school items are in for a disappointment this year.
As part of the recent state budget deal, the 10-day tax holiday on school supplies that ran from late August through Labor Day was eliminated. Gov. Phil Murphy had proposed scrapping the tax holiday in the budget he unveiled in February. Lawmakers accepted this in adopting the governor’s budget at the end of June.
The state first offered the tax holiday in 2022 to help consumers after inflation spiked during the coronavirus pandemic. The program offered temporary relief from the state’s 6.625% sales tax on all sorts of back-to-school items — laptops, art supplies, instructional materials, notebooks, pens, even recreation and sporting goods — but failed to make the cut in this year’s round of negotiations and was voted out of the $56.6 billion budget.
When introduced in 2022, Gov. Murphy touted the tax holiday as an inflation-fighting tool to help families emerge from the pandemic. The administration estimated the program would cost about $75 million in revenue annually.
Citing retail surveys that said the average family spent about $800 on back-to-school items, avoiding the sales tax would save about $50. But the more families spent on back-to-school, the more they would save, the logic went.
But with inflation easing, leaders said the program became expendable. Democrats, who control both houses of the N.J. Legislature, pushed through a companion bill, A4702, that eliminated the sales tax exemption on back-to-school items and the purchase of zero-emission vehicles, which was also part of Murphy’s original budget plan.
In a close vote that fell along party lines, the Assembly voted 41-34 to eliminate the tax breaks. In the Senate, the vote was 21-17.
The state Division of Taxation published notice of the repeal on July 2.
The FY2025 budget was adopted with little public debate, so the change is likely to catch many shoppers by surprise. And although the new budget raises taxes on the state’s wealthiest corporations, and increases funding to schools and NJ Transit, taking away tax breaks is never popular.
With the budget already in place, Gov. Murphy’s office declined to comment, as did the Treasury Department. The Democratic leadership justified ending the tax holiday by pointing to other benefits in the Murphy budget.
“This budget provided the highest amount of tax relief in state history, including over $3.6 billion in direct property tax relief,” said Chris Aikin, a spokesman for Assembly Speaker Craig Coughlin. He said the budget kept the $1,000 child tax credit, set funding to public schools at an all-time high, and enabled seniors to get half of their property taxes back through the StayNJ program.
“We did all this while providing record funding to our best-in-the-nation public schools, which allows towns to hold down local taxes. We’re proud of our record of fighting to make New Jersey more affordable for families, and we will continue to make that goal our number one priority moving forward.”
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