Gov. Murphy Proposes Higher Mansion Tax to Raise $322 Million

TRENTON, N.J. — Governor Phil Murphy’s proposed budget includes an increase in the "mansion tax" on real estate transactions over $1 million, aiming to raise an additional $322 million for the state.

TRENTON, N.J. — Governor Phil Murphy’s proposed budget includes an increase in the "mansion tax" on real estate transactions over $1 million, aiming to raise an additional $322 million for the state. The proposal, which must be approved by the Legislature, would double the buyer’s supplemental tax on homes sold for $1 million to $2 million, increasing it from 1% to 2%. For transactions over $2 million, the tax would jump to 3%. The current real estate transaction fee, paid by the seller, remains unchanged. It is based on a sliding scale, with the fee for a property valued over $1 million currently set at $6.05 per $500 of value.
In Cape May County, the potential impact of this increase could be significant. In 2024, 1,548 real estate transactions exceeded $1 million. Of those, 62% were in the $1 million to $2 million range, where the tax would rise to 2%, and 38% were over $2 million, where the tax would increase to 3%. The proposal is expected to generate an additional $322 million in revenue, contributing to the state's fiscal goals, but it would still leave the state with a budget deficit. Critics, including NJ Realtors and state Republicans, argue that the tax hike will make homeownership less affordable and hurt the state's economy. Murphy’s tax increase package also includes higher taxes on tobacco, cannabis, alcohol, and other goods, as well as an expansion of items subject to the state sales tax. The state budget for fiscal year 2026 must be signed by June 30.