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New Jersey repeals sales tax holiday, taxes zero emission vehicles

New Jersey seems to be in a spending mood. Its $56.7 billion fiscal year 2025 budget, signed by Governor Phil Murphy on June 28, 2024, funds pensions, property tax relief, schools, transportation, and more. But, the state giveth and the state taketh away: New Jersey has repealed its annual sales tax holiday and will also phase out a sales and use tax exemption for zero emission vehicles.

There will be no New Jersey sales tax holiday in 2024

The annual New Jersey sales tax holiday was a short-lived affair. During its two-year run, New Jerseyans could purchase the following items tax-free:

  • Computers priced less than $3,000

  • School computer supplies (e.g., printers) priced less than $1,000

  • School instructional materials and supplies (no price restrictions)

  • Sports or recreational equipment (no price restrictions)

What retailers need to do

If your business is registered for New Jersey sales tax and you sell products that are affected, you must update your sales systems. You have less than two months to prepare to collect New Jersey sales tax as now required.

Many other states continue to provide tax-free weekends and longer sales tax holidays, easing the tax burden on citizens (but heaping on burdens for sellers). Ohio even broadened and lengthened its sales tax holiday for 2024.

See our 2024 sales tax holidays blog post for state-specific information.

Enjoy the sales tax exemption for zero emission vehicles while you can

New Jersey lawmakers have also decided to gradually end a sales and use tax exemption for zero emission vehicles. Per A4702, this will occur in two phases:

  • A tax of 3.3125% will apply to receipts from sales of zero emission vehicles sold October 1, 2024 through June 30, 2025

  • The full sales and use tax rate (currently 6.625%) will apply to receipts from sales of zero emission vehicles starting July 1, 2025

“The electric vehicle change is more interesting than the repeal of the sales tax holiday,” says Scott Peterson, VP of Government Relations at Avalara. “Most states are trying to figure out how to replace the tax they lose from vehicles that don’t use gas, and many are doing that by increasing the taxes on electric vehicles. New Jersey’s action now falls into that mentality, and away from the mentality that they want to encourage electric vehicle sales.” 

What retailers need to do

Businesses that sell zero emission vehicles in New Jersey must prepare systems to properly tax qualifying vehicles at the 3.3125% rate by October 1, 2024.

How Avalara can help

Avalara calculates tax rates with rooftop accuracy in real time for more than 13,000 sales and use tax jurisdictions in the United States, instantly applying changes to taxability rates and rules. We automatically track and account for sales tax holidays and other exemptions, so you don’t have to. 

Learn about automating sales tax compliance with Avalara.

 

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