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Division of Taxation

Sales Tax Exemption - Zero Emission Vehicle (ZEV) (N.J.S.A. 54:32B-8.55)

The New Jersey Sales and Use Tax Act provides a sales and use tax exemption for zero emission vehicles (ZEVs), which are vehicles certified pursuant to the California Air Resources Board zero emission standards for the model year.

The exemption is NOT applicable to partial zero emission vehicles, which includes hybrids such as the Toyota Prius and Honda Civic Hybrid. The exemption is also NOT applicable to labor or parts for qualified vehicles.

The definition of "sale" in the law includes rentals and leases. Thus, the exemption is applicable to the sale, rental or lease of a new or used zero emission motor vehicle on and after May 1, 2004.

Motor Vehicle Dealers, Leasing and Rental Companies and Other Vendors:

In order to document the exemption for the sale or rental of a qualified zero emission vehicle, the customer should complete an Exempt Use Certificate (ST-4) and insert the statutory reference "N.J.S.A. 54:32B-8.55."

The Commissioner of the New Jersey Department of Environmental Protection (DEP) certifies a list of qualified Zero Emission Vehicles that are exempt from New Jersey sales and use tax. Please see their website for more information.

Last Updated: Friday, 02/12/21