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Division of Taxation

Sales and Use Tax- Consumer Assistance to Recycle and Save Act of 2009

On June 24, 2009 President Obama signed the Consumer Assistance to Recycle and Save Act of 2009 into law. (8 USC 1301) The Act establishes a new program under which the government will provide $3,500 or $4,500 to help consumers purchase or lease a new, more fuel efficient vehicle from a participating dealer when they trade in an old, less fuel efficient vehicle. This program is also known as the "Cash for Clunkers" program.

As the Federal funds provided to the dealer under this program are directed towards the purchase or lease of a new vehicle, those funds are deemed to be third-party consideration. Like in a manufacturer's rebate situation, the amount of third-party consideration must be included in the sales tax base when calculating the applicable sales tax due on the transaction. The funds are not deemed to be an augmentation of the trade-in value that a dealer offers a buyer.

New Jersey's definition of "sales price" includes "the total amount of consideration, including cash, credit, property, and services, for which personal property or services are sold, leased, or rented, valued in money, whether received in money or otherwise...". N.J.S.A. 54:32B-2(oo)

For further information on this program, see the National Highway Traffic Safety Administration's website: or call 1-866-CAR-7891.

Last Updated: Tuesday, 04/28/20