NEW JERSEY ELIMINATES SALES TAX EXEMPTION FOR ZERO EMISSION VEHICLES AND ANNUAL SCHOOL SUPPLY TAX HOLIDAY
New Jersey Sales Tax Exemption for Zero Emission Vehicles to be Phased Out. P.L. 2024, c. 19 phases out the New Jersey Sales and Use Tax exemption on sales of zero emission vehicles (ZEVs). The phaseout begins October 1, 2024 by imposing sales tax at the rate of 3.3125%, one-half of the statutory tax rate. Beginning July 1, 2025, the full statutory rate of 6.625% will be restored.
Since May 1, 2004, New Jersey has provided a sales and use tax exemption for the sale, rental, or lease of new or used ZEVs, certified pursuant to the California Air Resources Board zero emission standards for the model year. For medium duty and heavy-duty vehicles, the exemption became effective March 1, 2021. N.J.S.A. 54:32B-8.55.
The New Jersey Department of Environmental Protection (DEP) maintains a list of qualified ZEVs exempt from New Jersey sale tax. The exemption does not apply to hybrids vehicles, including plug-in hybrids. The exemption does not apply to maintenance and repair parts or services for qualified ZEVs.
Governor Murphy’s budget message explained that personal vehicles have long represented a significant portion of the sales tax base. New registrations of ZEVs are approaching 10 percent of new vehicle registrations and are becoming a regular part of the market.
To ensure that people with modest incomes continue to have access to electric vehicles, the budget appropriates $20 million more to the Charge Up New Jersey program for additional point-of sale rebates. Under the program, New Jersey residents can receive a $2,000 EV incentive and a $250 EV charger incentive. Beginning in fall 2024, income-qualifying residents can receive an additional $2,000 through the Charge Up+ incentive. Detailed information about eligibility, prequalification, and the incentive claim process for Charge Up+ have not yet been announced.
New Jesey Repeals School Supplies Sales Tax Holiday. P.L. 2024, c. 19 repeals annual sales tax holiday for certain school supplies and sport or recreational equipment. The repeal is immediately effective. Accordingly, the 2024 Sales Tax Holiday will not occur and sellers should charge sales tax on all taxable items.
In 2022, New Jersey adopted a sales tax holiday for the retail sale of computers, school computer supplies, school supplies, school instructional materials, and sport or recreational equipment. The sales tax holiday was in effect during the ten-day period up to and including the first Monday in September. N.J.S.A.54:32B-8.21a and C.54:32B-8.21b