LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
SENATE, No. 4639
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: DECEMBER 15, 2025
SUMMARY
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Synopsis: |
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Type of Impact: |
Annual State revenue and expenditure increases. |
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Agencies Affected: |
Department of the Treasury and the New Jersey Transit Corporation. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
FY 2026 and Thereafter |
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State Revenue Increase |
Indeterminate |
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State Expenditure Increase |
Indeterminate |
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· The OLS is unable to quantify the precise fiscal impact due to insufficient data regarding the total number of non-essential flights that will occur in the State in a given year, as well as the average price paid per passenger and the average occupancy per flight.
· Preliminary assumptions regarding non-essential flight volume and pricing suggests that the bill could increase annual State revenues by approximately $33.1 million to $66.2 million. However, this projection relies on market assumptions for which adequate data do not exist and does not account for the impact of the taxes on passenger demand.
BILL DESCRIPTION
The bill imposes a new tax on patrons of non-essential flights in the State and applies the State sales and use tax to charges for these flights. A non-essential flight is defined to include flights on helicopters or seaplanes that are not operated for emergency medical transportation, heavy-lift construction or infrastructure support, research or educational purposes, or for eligible nonprofit entities. Aircraft owned or operated by federal or military authorities, the State or its subdivisions, news agencies, and licensed hospitals or healthcare providers are excluded from taxation.
Under the bill, the patrons of non-essential flights are subject to a tax of $100 per seat or $400 per flight, whichever amount is greater, for flights departing from or arriving at any State-licensed airport, heliport, or helistop. The operator of the helicopter or seaplane is responsible for collecting and remitting the tax on a quarterly basis and must provide electronic receipts to patrons that include specified flight details.
The bill also amends the Sales and Use Tax Act to remove the exemption for transportation services as it applies to non-essential flights, thereby subjecting these flights to the State sales and use tax.
The bill establishes the Non-Essential Flight Tax Fund in the Department of the Treasury and requires the department to annually deposit into the fund all revenue derived from the new per-flight tax and an amount equivalent to all sales and use tax revenue derived from non-essential flights. The bill further requires that all monies deposited into the fund be annually appropriated to New Jersey Transit to support its operating expenses.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS concludes that the bill will have a net neutral impact on State finances, including indeterminate annual increases in State revenues generated from the taxation of non-essential flights and State expenditures attributable to the dedication of these revenues for New Jersey Transit operating support. The magnitude of these impacts cannot be determined due to insufficient data, including a lack of reliable information concerning the total number of non-essential flights occurring annually in New Jersey, the average price paid per passenger for these flights, and the typical number of occupied seats per flight. Flight activity and pricing are also expected to vary based on market demand, tourism trends, and operator behavior, all of which may be impacted by the taxes imposed under the bill, further limiting the OLS’s ability to quantify the impact of the bill.
Despite the limitations, preliminary assumptions may
shed light on the potential magnitude of revenues to be generated under the
bill. For example, assuming the average cost of a non-essential flight is $215
per passenger, and an average of four patrons occupy each flight, the sales and
use tax collected per flight would be approximately $57. In addition, assuming
the amount of the tax imposed on each patron of a non-essential flight is $400
in taxes, the new tax would generate an estimated $1,600 in State revenue per
flight. Incorporating both taxes together, if between 20,000 and 40,000
non-essential flights departed or arrived in the State annually, the total
combined tax collections could range from approximately $33.1 million to $66.2
million. This revenue would be dedicated under the bill to support the
operating expenses of New Jersey Transit. These values are presented for
illustrative purposes only and should not be interpreted as a definitive
estimate of actual revenue projections, as this projection relies on multiple
market assumptions for which sufficient data are not available and does not
account for the impact of the taxes on passenger demand.
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Section: |
Revenue, Finance, and Appropriations |
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Analyst: |
Associate Fiscal Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).