Kerrie Joyce 
During its recent term, the NJ State Assembly moved to alter legislation regarding the NJ Mansion Tax to place the responsibility for the tax on property sellers. The new provision is a major modification to the previous rule, which required buyers to pay the tax. The adjustment to the tax policy was passed alongside the NJ State budget for 2026. Read on to learn more about the policy change and what local realtors have to say about the NJ Mansion Tax.
About the Mansion Tax
The policy, commonly known as the mansion tax, has been in place in New Jersey since it was signed into law in 2004 by former Governor Jim McGreevey. The legislation impacts properties with a value of over $1 million, taxing those at a rate of one percent. In response to climbing property prices and the need for state budget funds, the tax rates for property sales over $2 million and above were increased in 2025. The increased rates include properties valued at over $2 million at two percent, and those over $2.5 million at 2.5 percent, and so on, with a maximum rate of 3.5 percent on properties worth over $3.5 million. The onus of the fee has historically been placed on the property buyer, but has now shifted onto the property seller, effective July 10th, 2025. The shift is intended to alleviate some of the pain felt by potential new homeowners in a real estate market that is especially tough for buyers.
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The shift in regulation was introduced to the New Jersey State Assembly on June 26th, 2025. The legislation was co-sponsored by Assemblywoman Verlina Reynolds-Jackson (D-NJ District 15) and Senator Benjie E. Wimberly (D-NJ District 35). Outlined in the NJ budget plan for the 2026 fiscal year, the new mansion tax will generate over $550 million in tax revenue for the state.
The tax applies to residential properties, commercial properties, certain farm properties that include a building or structure intended for residential use, and cooperative units.
What Do Realtors Think?
According to the latest market data from the North Central Jersey Association of Realtors, May 2025 saw a 1.8 percent rise in housing prices and a two percent decrease in property sales in comparison to May of last year. The NAR (National Association of Realtors) also states that these market trends vary regionally, as property sales increased in the Midwest, decreased in the West and Northeast, and remained unchanged in the South. The Association also outlined a 20.8 percent increase in inventory compared to the same time last year, which has provided relief to some buyers.
Jill Biggs of the Jill Biggs Group said, “It’s definitely a change that people are talking about. I think it’s important to remember that laws change all the time and we really have no option but to adjust. Last August, we had a pretty massive change where some fees were moved from the seller’s side to the buyer’s side, and the market adjusted to it. This is another change that we all just have to adjust to. I feel for the homeowners that had to pay it as buyers, and now will have to pay it again when they sell, but at the end of the day, everything is a negotiation.”
Alexander Calle of the Jersey City Luxury Group at Serhant echoed a common criticism of the legislation surrounding the change in properties valued at over $1 million when the law was originally written in 2004 compared to today saying, “I don’t think that the bracketing made any sense, there’s real inflation happening right now and it’s driving up home prices across the board. A $1 million home today is maybe a modest multi-family in Hudson County. For a working-class family, to call that a mansion and taxing it like one it just feels like a money grab.”
Regarding the impact of the new adjustment in the law, Alexander said, “It seems like a win for buyers, but it’s more nuanced than that. We are in a competitive low inventory market. I still think, from the $1 million to $2 million range, sellers are going to push for buyers to absorb that cost during negotiations. So we’re still in a sellers market. I think for homes priced above the $2 million range, maybe that will be a more fluid conversation between parties, structuring the deal between seller and buyer and what each is covering.”
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Since the effectiveness of policies like these is widely debated, as the property seller may opt to have the buyer absorb the cost of the tax during negotiations, it is unclear what the impact of the change might be, if any at all. What is clear is that the housing market for both aspiring owners and renters is more challenging than ever and lawmakers are making attempts to address the issue. With new rent-setting algorithm bans, potential broker fee shifts, and this most recent shift to alleviate home buyers of mansion tax fees, the difficulty of finding housing in 2025 is not going unnoticed. Only time will tell, however, if these measures will be adequate solutions to obstacles in the path of those seeking housing.
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