UPDATE: NJ Sales Tax Holiday Coming For Limited Run

NEW JERSEY — Now that it's officially summer, the last day of school and the deadline for New Jersey officials to reach a budget agreement are fast approaching. With next school year in mind, Gov. Phil Murphy and state lawmakers reached an agreement on a sales-tax holiday for school supplies that will occur just before students return from summer break.

The 10-day holiday will run from Aug. 27 to Sept. 5. Under the sales-tax holiday, tax-exempt items will include the following:

• school supplies, such as pens and pencils, notebooks and binders
• art supplies, such as paints and paintbrushes, clay and glazes
• instructional materials, such as reference books, reference maps, globes, textbooks and workbooks
• computers and related supplies, such as computer-storage equipment, printers and personal digital assistants

Other back-to-school staples, such as clothes, are already exempt from New Jersey's 6.625 percent sales tax.

The tax holiday, which state Democratic leaders announced Wednesday in Red Bank, comes amid several issues ballooning within the state: inflation piling on the state's high cost of living and struggles to fill classrooms with teachers. Read more: Who Will Teach NJ's Kids After Mass Exodus From Education?

"A back-to-school tax holiday has been talked about for a long time," Murphy said, "and as inflation is a central worry around many of our residents’ kitchen tables, now is the time to do it. This program will cut the cost for the most essential items needed for educational success and help make New Jersey more affordable for our students and families."

The fiscal estimate for the tax holiday is $75 million, according to the Murphy administration. The administration also estimates that the state has roughly 2 million K-12 and college students. State public schools also had 129,689 full-time teachers in the 2020-21 school year, according to the New Jersey Department of Education.

The aforementioned groups don't mention others who might take advantage of the tax holiday, such as private-school teachers, college professors or even people unaffiliated with schools. But based on the estimated figures from the Murphy administration, average savings would come out to about $35 per person.

The Murphy administration and the State Legislature have until June 30 to agree on a budget for Fiscal Year 2023. When the governor introduced his $48.9 billion budget proposal March 8, it included a year of "fee holidays" for drivers renewing licenses, certain health care professionals applying for or renewing their licenses, couples getting married, and residents visiting State Parks.

Last week, Murphy also announced an expansion to the new ANCHOR (Affordable New Jersey Communities for Homeowners and Renters) Tax Relief Program, which would replace the Homestead Rebate. The average annual rebate would total $971 for more than 2 million homeowners and renters, according to figures from the Murphy administration.

Murphy has called the proposed tax relief "historic," while several Republican lawmakers have called it a "gimmick" or said it doesn't go far enough. Read more: This Is How Much Property Tax Relief You'll See In New NJ Program

While criticizing the sales holiday, Assembly Republican Leader John DiMaio estimated it would save New Jerseyans approximately $28.75 each.

"Another underwhelming gimmick when people need real relief," DiMaio (R-23) said. “How tone-deaf are they? When you can’t afford living in New Jersey, this short holiday on notebooks and pencils is meaningless."

But each year, the average family spends $250 per child on school supplies alone, while teachers spend about $600 of their own money on classroom supplies for their students, according to Assemblymember Paul Moriarty (D-4).

"Prices are rising with inflation showing no signs of letting up," Moriarty said. "Now more than ever, it is critical to help families cut costs where they can. A tax holiday right before school begins each year will be something parents and teachers can count on while back-to-school shopping."

Inflation surged 8.6 percent from May 2021 to last month, according, to the Consumer Price Index. That's the steepest one-year increase since 1981.