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The legislation creates a second form of drivers license in addition to the federally compliant Real ID. The Standard Basic license and ID will cover the estimated half a million undocumented New Jersey residents who are of driving age.
Murphy said the bill will bring fairness to those who qualify.
"Insurance companies won't be able to hike your premiums because you don't have a real ID, and employers and landlords, and even your government, won't be allowed to discriminate against you," he said.
Murphy said the 13 other states that allow non-residents to obtain drivers licenses have not had any problems.
"The only thing these states have seen is a dramatic increase in the number of licensed and insured drivers and in the number of residents able to contribute to the economy. This is what is going to happen in New Jersey as well," he added.
The bill will take effect in January 2021.