New Jersey residents looking to purchase a new or used battery-electric vehicle (BEV) will soon face higher costs as the state plans to phase out a 6.625% sales tax waiver that has been in place for the past 20 years. The move is part of a broader effort to prioritize electric vehicle incentives and combat climate change, with the state already announcing a ban on the sale of new combustion-powered vehicles by 2035.
The state’s ChargeUp incentive program, which provides residents with up to $4,000 in rebates for buying an EV, will remain in effect. However, the program faced challenges last year when it had to be paused due to funding depletion. Between 2020 and 2023, the program provided approximately $90 million in incentives.
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New Jersey is seeing a rise in electric vehicle adoption, with approximately 123,000 electric vehicles on its roads last year, representing about 1.8% of the total light-duty vehicle fleet. According to the New Jersey Coalition of Automotive Retailers, approximately 11% of cars sold in the state last year were BEVs, while 9% were hybrids and plug-in hybrids.
During a recent budget address, Governor Phil Murphy did not specify the exact changes to the EV sales tax breaks but emphasized the state’s commitment to addressing climate change. He stated, “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.”
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Despite the phasing out of sales tax waivers for new and used electric vehicles, New Jersey does not intend to ban the sale of used vehicles with combustion engines. Governor Murphy also clarified that drivers will not be required to purchase electric or hybrid vehicles, as the Advanced Clean Cars II regulation being followed by the state is a rule and not a law, and can be overturned in the future.
