Gov. Phil Murphy also said that outdoor demonstrations protected by the First Amendment, including religious services and protests stemming from George Floyd's death, can be held, regardless of the number of attendees.
"We believe such a rule appropriately prioritizes individuals' rights to speak and worship freely," the Democrat said during a news conference.
The decision effectively puts an end to the stay-home order that Murphy signed in March.
People will still be required to wear masks when shopping indoors, and their use is recommended generally, Murphy said.
He said he planned to increase the limits for other outdoor gatherings to 250 people by June 22 and to 500 people by July 3. Dining indoors remains prohibited, the governor said.
Murphy's moves Tuesday come a day after he was criticized by political opponents for attending rallies over the weekend, apparently in violation of his own executive order limiting gatherings to 25 people or fewer.
The decision wasn't related to the pushback, Murphy said, and he echoed his earlier statements about the importance of the Black Lives Matter protests.
"I think we all thought we have to be consistent," he said. "This is unlike any other moment in our nation's history. We have to acknowledge that."
Indoor gatherings must be limited to 25% of capacity of a space or 50 people, whichever is smaller Murphy said. The previous limit for indoor gatherings was 10 people, and 25 for outdoors. He said there's no requirement to reopen.
"No one should reopen unless and until they feel fully confident in their ability to do so," Murphy said.
Murphy reported there were 375 new cases overnight, bringing the total to 165,000. The death rose by 91 over the same period for a total of 12,303 recorded fatalities from the virus, Murphy said.
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