NJ Taxes Electric Vehicles? More Ways to Save

As sales of electric vehicles (EVs) rise in New Jersey, so do taxes on residents. Earlier this year, Gov. Phil Murphy (D-N.J.) signed a phaseout on the sales tax exemption for zero-emission EVs. 

New Jerseyans already pay some of the highest taxes in the nation. According to the Tax Foundation, the Garden State has the eighth highest gas tax rate in the country. And, as Kiplinger previously reported, New Jersey is one of the most expensive states for homeowners to live in. 

So, how will the phase-out affect you and what are some things you can do to put tax savings back in your wallet? Read on.

New Jersey EV incentive

You may have heard of the NJ EV tax exemption and the federal EV tax credit. But it’s important to note that they’re two different things. 

The EV tax exemption in New Jersey was a full sales tax exemption for zero-emission vehicles (ZEVs). The law was put in place some 20 years ago. 

Since then, New Jersey has provided millions of dollars in funding to similar EV programs, like the Charge Up New Jersey rebate program and other projects geared toward charging stations. 

In this year’s budget brief, Gov. Murphy’s administration reported a minimum of $215 million in spending on these programs alone. 

However, the federal EV tax credit:

• Provides up to $7,500 in savings for qualified new “clean vehicles” purchased
• Unlike the New Jersey ZEV sales tax exemption, applies to qualified new or used electric vehicles, including hybrid plug-ins 

Rest assured, since these are separate incentives, you might be eligible for the IRS EV tax break, though eligibility is subject to income limits.  

For more information see How the EV Tax Credit Works.

Are electric vehicles exempt from sales tax in NJ?

A colleague of mine once quipped, “New Jersey taxes anything that moves.” And depending on your car situation, there could be some truth to that. 

As the number of EVs on NJ roads moved from 68,000 to 140,000 in two short years, a new law has been enacted to tax the growing consumer base. 

“Personal vehicles have long represented a significant portion of the sales tax base,”  the State of New Jersey said in its 2025 budget brief released earlier this year. ” The report adds that “with new registrations of EVs approaching 10 percent of new vehicle registrations, it is responsible to acknowledge these vehicles as a regular part of the Market.” 

But what does that mean for you, the taxpayer?

For starters, the New Jersey repeal mandates: 

• A phase-out provision for electric vehicles in the state
• A sales tax of 3.3125% on ZEVs purchased on and after Oct. 1, 2024
• Sales of EVs on or after July 1, 2025, will see a 6.625% sales tax

However, you may not have to buy a New Jersey EV to gain tax relief in the state. There are other state programs for which you may still be eligible. 

NJ rebate checks: Who qualifies? 

For example, you could be eligible for the New Jersey ANCHOR program. As Kiplinger has reported, this program provides property tax relief to eligible renters and homeowners alike via checks in the mail or direct deposit into your bank account. 

For more information, see NJ is Sending Millions in ANCHOR Payment Checks. 

Another program for which you may be eligible is the NJ ‘Senior Freeze’ property tax program. Open to residents 65 or older, this program effectively reimburses you for any tax paid over a certain amount. 

To learn more, see NJ ‘Senior Freeze’ Property Tax Checks Mailed.

But if you want to apply, act soon: both programs have an enrollment deadline. 

Lastly, you can hit the ballot box this November. In addition to several key tax issues that will be debated during and after the election, the 2024 election could impact the EV tax credit. 

So, stay informed and — where applicable — cast your vote.

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