LEGISLATIVE FISCAL ESTIMATE

SENATE, No. 4658

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: JULY 1, 2025

 

 

SUMMARY

 

Synopsis:

Eliminates sales tax on baby necessities and sunscreen.

Type of Impact:

Recurring State revenue decrease to the General Fund and Property Tax Relief Fund.

Agencies Affected:

Department of the Treasury.

 

 

Office of Legislative Services Estimate

Fiscal Impact

FY 2026 (October 2025 – June 2026)

FY 2027

FY 2028

 

State Revenue Reduction

$13.5 million

$16.5 million

$16.9 million

 

 

 

 

·         The Office of Legislative Services (OLS) projects that the bill will lower State revenue collections by $13.5 million in FY 2026 due to the exemption of certain baby products and sunscreen from the sales and use tax.  This estimate assumes the exemptions will begin October 1, 2025.  The OLS estimates that, individually, the exemptions will reduce annual revenue collections by $10.3 million and $3.2 million, respectively.

·         The OLS projects that, starting in FY 2027, the bill will decrease State revenue collections by $16.5 million and grow annually with the general inflation rate.

 

 

BILL DESCRIPTION

 

      This bill expands the list of products exempted from the sales and use tax.  This list includes safety and care baby products such as (1) baby wash or soap, baby shampoos, baby lotions, and baby powders; (2) child restraint systems; (3) cribs; (4) nursing bottles, nipples, and funnels; and (5) strollers.  The bill also adds sunscreen to the list of goods exempted from the sales and use tax.  The bill clarifies that sunscreen does not include products marketed or intended for use as cosmetics or otherwise intended to be applied for cleansing, beautifying, promoting attractiveness, or altering appearance.  The sales and use tax exemption is to begin on October 1, 2025. 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      The Executive did not provide a formal fiscal note for this bill.  However, in the FY 2026 Budget in Brief, the Administration estimates that exempting certain baby products and sunscreen from the sales and use tax would reduce revenue collections over a 10-month period by $7.5 million.  Subsequently, the Office of Revenue and Economic Analysis provided additional information showing a full year revenue loss of $9 million, compromised of $7 million from the exemption on infant furniture and equipment, and $2 million from the exemption of sunscreen.

 

OFFICE OF LEGISLATIVE SERVICES

     

      The OLS estimates that the bill will decrease State sales and use tax revenue collections by $13.5 million during FY 2026, assuming an October 1, 2025 start date for the exemption.  While the OLS’s projected revenue decrease is larger than that of the Administration, this estimate is within reasonable distance of the Executive’s projected revenue loss, as its estimate of an annualized $9.0 million revenue loss does not include the revenue-decreasing impact of all exempted baby products under the bill.  The OLS projects that, starting in FY 2027, the bill will decrease State revenue collections by $16.5 million and grow annually with the general inflation rate.

 

Methodology

 

      Using a 2024 industry report from Mintel, a market research firm, detailing the average annual spending on all baby care products to be exempted, the OLS estimates that a New Jersey family spends between $400 and $650 on baby care products per year, mostly concentrated in the baby’s first one to two years of life.  In addition, industry data on specific baby furniture and safety equipment suggests that, in the baby’s first year of life, a family spends between $800 and $1,300 on these items.  According to the Centers for Disease Control and Prevention’s Vital Statistics Surveillance Report, there were 101,361 births in New Jersey in 2024.  Assuming an unchanged number of births moving forward as well as a continued cohort of babies from the prior year, and focusing on mid-point estimates for per-baby annual spending ($1,837), the OLS projects that this bill will result in a revenue loss of $12.3 million ($10.3 million in FY 2026 due to the exemption start date on October 1, 2025) as a result of exempting baby care products and baby furniture and safety equipment from the sales and use tax base.        

      Private estimates from Statista Market Insights suggest that per capita­ annual spending on sunscreen in 2024 was $6.01.  Given New Jersey’s population of 9.5 million, the OLS projects that exempting sunscreen from the sales and use tax will result in a State revenue loss of $3.8 million ($3.2 million in FY 2026 due to the exemption start date on October 1, 2025).          

 

Unit:

Legislative Budget and Finance Office

Analyst:

Oscar Mendez

Revenue and Economic Policy Analyst

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.).