On December 9, 2015, Governor Christie signed into law, as P.L. 2015, c. 170, Senate Bill 2784 which provides a partial exemption and maximum sales and use tax imposition for sales and uses of boats and vessels. The new law also establishes 30-day grace period for use tax imposition on certain boats and vessels used by resident purchasers.
The new law grants boat and vessels a 50% exemption from sales tax, effectively reducing the tax rate to 3.5%. The law also caps the tax due on the sale or use of a boat at $20,000. The price of a boat in excess of $571,429 is essentially exempt from New Jersey sales and use tax.
An earlier proposal, vetoed by Governor Christie, offered only a $20,000 sales and use tax cap. The Governor criticized that proposal since it provided “no relief to other individuals, including middle-class citizens, who purchase smaller boats.”
The new law also requires New Jersey residents using a boat temporarily in New Jersey to pay compensating use tax if the period of temporary use totals more than 30 days in a calendar year.
The 50% exemption and $20,000 cap are effective February 1, 2016. The new use tax rule is effective after December 31, 2015.
James B. Evans, Jr. is a shareholder in the firm and earned his J.D. degree at the Rutgers University School of Law – Camden and his LL.M in Taxation at New York University. Mr. Evans’ particular areas of concentration include state taxation, corporate taxation and business planning. He lectures regularly in the area of taxation and accounting.