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NJ Reduces Sales and Use Tax on Boats and Vessels

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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 taximposition 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.

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