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P.L. 2024, c. 19 repeals the Sales and Use Tax exemption on sales, leases, and rentals of zero emission vehicles (ZEVs). Beginning October 1, 2024, sales of ZEVs are subject to tax, and the exemption will be phased-out over nine months. The schedule for the phase-out is as follows:
Period When Zero Emission Vehicles are Sold
Tax Rate
October 1, 2024 to June 30, 2025
3.3125%
July 1, 2025 and after
6.625%
The Commissioner of the New Jersey Department of Environmental Protection (DEP) certifies a list of qualified ZEVs that are affected by this change. See DEP's website for more information.
Sales, Leases, and Rentals Prior to October 1, 2024
The New Jersey Sales and Use Tax Act provides a Sales and Use Tax exemption for zero emission vehicles, 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. The exemption is also NOT applicable to labor or parts for qualified vehicles.
The Sales and Use Tax Act defines "sale" to include rentals and leases. (N.J.S.A. 54:32B-2(f)). Thus, the exemption is applicable to the sale, rental, or lease of a new or used zero emission motor vehicle delivered prior to October 1, 2024.
To document the exemption for the sale, rental, or lease of a qualified zero emission vehicle, the customer should fully complete an Exempt Use Certificate (Form ST-4) with "N.J.S.A. 54:32B-8.55" as the statutory reference.
Sales, Leases, and Rentals Prior to October 1, 2024, through June 30, 2025
To document the exemption for the sale, rental, or lease of a qualified zero emission vehicle from October 1, 2024, to June 30, 2025, the customer should fully complete an Exempt Use Certificate (Form ST-4) with "N.J.S.A. 54:32B-8.55" as the statutory reference.
From October 1, 2024, through November 18, 2024, Forms ST-4ZEV and ST-4ZEV Lease were used to document the partial exemption during the phase-in period. Based on feedback from retail automotive dealers, the Division has decided to eliminate the use of ST-4ZEV and ST-4ZEV Lease forms.
Official Site of The State of New Jersey