NJ TRANSIT commuters had to dig a bit deeper into their wallets on Tuesday when a previously approved 3% fare increase went into effect at the start of the new fiscal year.
The 3% fare hike follows a 15% increase that was implemented last July, along with a Corporate Transit Fee that costs the state's largest employers more than $800 million in taxes dedicated to mass transit improvement projects.
NJ TRANSIT’s operating budget for FY26 is $3.2 billion, which represents a 5.1% increase over the previous fiscal year. Farebox revenues in FY26 are projected at $980 million, a 3.5% increase from FY25 levels. However, revenues collected through fares cover only 31.1% of the NJ TRANSIT expenditures.
State operating subsidies ($1.44 billion) cover 45.7% of NJ TRANSIT’s expenses in FY26, including $815.5 million in Corporate Transit Fee tax revenue. The tax is imposed at the rate of 2.5% on the net income of corporate taxpayers with net incomes of at least $10 million. This 2.5% fee, levied on top of the 9% Corporation Business Tax, has created the highest corporate tax rate (11.5%) in the nation for large New Jersey employers.
The remaining 23.2% of NJ TRANSIT’s operating budget is supported by other reimbursements and commercial revenue.
NJ TRANSIT maintains that the COVID-19 pandemic, which led to plummeting ridership, is the primary reason for its increasing dependency on operating subsidies and fare hikes. In FY 2019, farebox revenue totaled $973.8 million, but in FY 2021 during the pandemic, it was down to $299.1 million, according to a budget analysis prepared by the nonpartisan Office of Legislative Services.
The combined $4.44 billion in federal COVID-19 pandemic support that NJ TRANSIT received between FY20 and FY25 kept the agency afloat despite its plunging farebox revenues. However, federal COVID funding has now been depleted.
When NJ TRANSIT raised fares 15% in July 2024, it also approved an annual inflation adjustment of 3% for every year thereafter. This means the 3% increase that took effect on Tuesday is unlikely to be the last.
