After a solid month of hiring in December, New Jersey’s economy ended last year with a net gain of 9,000 jobs, the latest federal data show.
State tax collections were also running slightly ahead of a projected growth rate as the fiscal year reached its Dec. 31 midway, according to the New Jersey Department of the Treasury.
The modest gains in jobs and tax revenue provide some economic tailwind for Gov. Mikie Sherrill as her new administration faces the task of preparing long-range budget forecasts for the next fiscal year.
It’s those data that help estimate how much revenue will be generated by major sources, such as the income and sales taxes, throughout New Jersey’s July-to-June fiscal year. The same estimates will also help determine whether current annual spending – a record of nearly $60 billion – can be sustained without raising taxes.
In June, then-Gov. Phil Murphy and fellow Democrats who control the Legislature raised taxes by more than $600 million when they enacted the current spending plan.
Sherrill, a former Democratic congresswoman who is a newcomer to state government, campaigned on affordability and accused her Republican opponent of plotting a sales tax increase. In her first week, she was already facing calls from progressives to increase taxes on New Jersey’s wealthiest residents as the state faces federal funding cuts for services like health care and food assistance.
Credit: (U.S. Bureau of Labor Statistics; New Jersey Department of Labor and Workforce Development)At the same time, the Trenton-based New Jersey Chamber of Commerce, with more than 1,000 member companies and associations, says it’s looking forward to working with the administration on pro-business matters.
“A strong, competitive business climate is essential to growing jobs, attracting investment, and supporting communities in every region,” Tom Bracken, the group’s president and chief executive officer, said in a statement.
Help from higher taxes
At the end of December, state revenues were 4.8% higher than a year ago, according to Treasury. The annual budget, boosted by Murphy’s tax increases, assumed 3.3% annual growth.
Receipts over this fiscal year’s first half were led by the gross income tax, according to the Treasury data.
Income tax collections for the period were up nearly 13% compared with the prior year, bringing in $960 million in additional revenue.
The income tax is the largest single revenue source for the state’s annual budget, with proceeds constitutionally dedicated to funding K-12 public-school aid and direct property-tax relief programs like Anchor, Senior Freeze and Stay NJ.
Another major revenue source is the sales tax, which supports the budget’s general fund. Sales tax collections were up about 3% year over year through December.
Treasury officials noted there is typically a one-month delay in sales tax reporting and collections, which means the December totals reflect November economic activity.
A revenue report due from Treasury next month will reflect data from last month, during the closely watched holiday shopping season, the officials said.
Collections from New Jersey’s corporation business tax, or CBT, which is another key revenue source for the general fund, continued to lag behind totals from the prior fiscal year through the end of December.
In all, the CBT collections were off last year’s pace by more than 30% midway through the current fiscal year, Treasury officials said.
The poor performance can be attributed, at least in part, to significantly higher tax refunds, many of which have been claimed for tax periods prior to 2024, the officials said.
Bumpy jobs
On employment, 2025 was an uneven year, with several months of net gains, and also several with net losses, according to the preliminary year-end estimates released last week by the U.S. Bureau of Labor Statistics.
Without an estimated 5,700 jobs added in December, the jobs total for New Jersey in 2025 would have barely topped 2024’s. And those December 2025 gains followed two straight months of net losses, totaling 4,800, according to revised federal estimates.
From January to December last year, only two of nine private-industry sectors saw net gains. They were private education and health services, up 28,400, and professional and business services, up 8,900, the federal data show.
Net losses in 2025 were recorded in the following sectors: construction, down 10,200; trade, transportation, and utilities, down 9,800; other services, down 3,500; information, down 3,400; manufacturing, down 600; financial activities, down 300; and leisure and hospitality, down 200.
New Jersey public sector jobs in 2025 declined by 200, the federal data show.
Meanwhile, state unemployment was 5.4% at the end of 2025. That’s well above the 4.6% at the end of 2024, and also higher than the national unemployment rate of 4.4%.
Analysts from the Trenton-based New Jersey Business & Industry Association noted that in November, only California, at 5.5%, had higher unemployment than the 5.4% rate measured in New Jersey that month.
The annual budget message from New Jersey’s governor is required to be delivered to lawmakers each year on or before the fourth Tuesday in February.
The deadline, though, can be pushed back by lawmakers, and that often occurs in the years when a new governor takes office, since the statutory budget deadline comes roughly a month after their inauguration.
— Graphics by Renee Maskin
