Purchasing a vehicle in New Jersey typically involves paying sales tax. However, there are several exemptions available that could save you money. To claim these exemptions, it’s essential to visit a New Jersey Motor Vehicle Agency. For exemptions not listed here, you should contact the MVC Sales Section of the New Jersey Division of Taxation directly at [email protected]. This guide outlines the main sales tax exemptions for cars in NJ.
New Jersey Sales Tax Exemptions for Vehicles
New Jersey provides several sales tax exemptions for vehicle purchases, catering to different situations and types of buyers. Here are the key exemptions:
1. Non-Resident Vessel Purchasers:
This exemption specifically applies to boat or vessel purchases. If you are not a resident of New Jersey and will not be using the vessel in connection with any employment, trade, or business within NJ, you are exempt from sales tax on the vessel.
2. Governmental and International Organizations:
Vehicles acquired by the following entities are exempt from sales tax:
- The Federal government or any of its agencies.
- The State of New Jersey, including its agencies or political subdivisions.
- The United Nations or any international organization where the United States is a member.
3. Specific Vehicle and Usage Exemptions:
This is a broad category covering various vehicle types and specific uses:
- Farm Vehicles: Vehicles used directly and exclusively for agricultural production or the sale of farm products are exempt.
- School Buses: Buses used for transporting schoolchildren are exempt from sales tax.
- Recycling Equipment: Vehicles classified as recycling equipment are exempt.
- Repossessed Vehicles: The acquisition of repossessed vehicles is exempt from sales tax.
- Used Mobile Homes: Purchases of used mobile homes are exempt; however, this does not extend to used travel trailers, campers, or recreational vehicles.
- Limousines: Limousines are included in the list of exempt vehicles.
- Low Speed Vehicles (LSVs): LSVs certified by the Commissioner of the New Jersey Department of Environmental Protection (NJDEP) can be exempt.
- 100% Zero Emission Vehicles (ZEVs): Fully electric vehicles are generally exempt, but require a specific Exempt Use Certificate. It’s important to note that sales tax regulations for zero-emission vehicles are subject to change. From October 2024 through June 2025, a reduced tax rate of 3.3125 percent may apply, and from July 1, 2025, onwards, the standard sales and use tax rate will be imposed. Always verify the current tax rate with the NJ Division of Taxation.
- Resident Service Members: Exemptions are available for resident service members under specific conditions, detailed further in the “Special Conditions” section.
- Tax-Exempt Organizations: Vehicles purchased by organizations holding a 9-digit exemption number from the New Jersey Division of Taxation are exempt.
4. Leasing or Rental Company Purchases:
If a leasing or rental company, registered for New Jersey sales tax, purchases a vehicle from a non-registered vendor, the transaction is exempt from sales tax.
5. Inherited Vehicles:
Vehicles acquired by an heir, legatee, or trust beneficiary as part of an inheritance are exempt from sales tax.
6. Out-of-State Purchase by Non-Resident (Then Becoming NJ Resident):
While the provided text skips exemptions 6 & 7 and goes to 8, based on common sales tax principles, exemption #6 likely refers to vehicles purchased out-of-state by individuals who were non-residents at the time of purchase but later become NJ residents. [Note: This is inferred and needs verification against official NJ tax documentation for absolute accuracy if the original article had full numbering]
7. Out-of-State Purchase, Title, and Registration by Non-Resident:
If a vehicle was purchased, titled, and registered in another state while the purchaser was a non-resident of New Jersey, it is exempt from NJ sales tax.
8. Commercial Vessels:
Vessels used for commercial fishing or as party boats (carrying more than six passengers and subject to annual inspection) are exempt. For detailed guidance on sales and use tax for boats and vessels, refer to the NJ Division of Taxation website.
9. Commercial Trucks and Heavy Vehicles:
Certain commercial vehicles are exempt, including:
- Commercial trucks, truck tractors, trailers, or semi-trailers registered in New Jersey with a Gross Vehicle Weight Rating (GVWR) exceeding 26,000 pounds as specified by the manufacturer.
- Vehicles operated actively and exclusively for interstate freight carriage under a certificate or permit from the Interstate Commerce Commission.
- Farm vehicles registered under motor vehicle statute N.J.S.A. 39:3-24, 25 with a GVWR exceeding 18,000 pounds as specified by the manufacturer.
Special Conditions for Sales Tax Exemptions
Several special conditions apply to specific exemptions:
- Mobile Homes (Used): The exemption for used mobile homes is specific and does not include other types of recreational vehicles like travel trailers or campers.
- Resident Service Members: If you are a New Jersey resident service member stationed outside of NJ and purchase a vehicle out-of-state but intend to title it in New Jersey, you can defer sales tax payment until the vehicle is brought into NJ after your active duty release. This requires a Letter of Deferment from the Division of Taxation, which must be presented when titling the vehicle to avoid immediate sales tax payment.
- Disabled Veterans: Disabled veterans who receive funds from the Veterans Administration to purchase a vehicle are exempt from sales tax.
- Financial Institutions (Repossession, etc.): Banks, leasing companies, insurance companies, and other financial institutions taking vehicle titles due to repossession, insurance loss, or lien addition are exempt from sales tax, unless the vehicle is retained for the organization’s direct use. A sales tax-satisfied stamp with the correct exemption number is necessary in these cases.
- Gifts: When a vehicle is given as a gift, the sales price should be indicated as “GIFT.” Any alterations or suspicious entries may require additional documentation for verification by the Motor Vehicle Commission.
For further clarification or specific situations, it’s always best to consult the New Jersey Division of Taxation or visit a Motor Vehicle Agency. You can also find more information through the Motor Vehicle Casual Sales Notices .
