New Jersey residents in the market for a new or used battery-electric vehicle will soon have to cough up more money after state officials revealed it will phase out a sales tax waiver.
For the past 20 years, local buyers, leasing, or renting a new or used electric vehicle have been exempt from a 6.625% sales tax. Over the next three years, this tax break will be phased out and the state will start to prioritize EV incentives. It has already announced a ban on the sales of new combustion-powered vehicles by 2035.
NJ reports the state’s ChargeUp incentive program will remain in effect. This program provides residents will up to $4,000 in rebates for buying an EV. It is not yet clear how much money has been allocated to this program but last year, it had to be paused because all of the funding allocated to it had dried up. The program provided approximately $90 million in incentives between 2020 and 2023.
Approximately 123,000 electric vehicles were on New Jersey roads last year, representing about 1.8% of the total light-duty vehicle fleet, and sales continue to swell. The New Jersey Coalition of Automotive Retailers says that approximately 11% of cars sold across the state last year were BEVs while 9% were hybrids and plug-in hybrids.
Read: New Jersey Pauses Electric Vehicle Rebate After Running Out Of Money
While speaking during the state’s recent budget address, New Jersey Governor Phil Murphy did not specify what changes will be made to EV sales tax breaks, but said “with our budget, we will…live up to our responsibility to continue confronting one of the largest threats to our state and to our planet: climate change.”
While the sales of new gas-powered cars will be phased out, New Jersey doesn’t intend to ban the sale of used vehicles with combustion engines. Murphy also added that drivers will not be forced to purchase electric or hybrid vehicles, noting the Advanced Clean Cars II regulation being followed by the state is a rule and not a law so it can be overturned in the future.
