New Jersey’s statewide sales tax rate is still 6.625 percent, unchanged since January 1, 2018, but the recent New Jersey sales tax increase that most buyers will feel is the end of the zero-emission vehicle exemption, which brought electric vehicles to the full rate on July 1, 2025. The governor’s FY2026 budget also proposes extending the sales tax to several categories of goods and services that are currently untaxed. Nothing has changed the 6.625 percent headline rate itself.1Justia. New Jersey Code 54:32B-3 – Taxes Imposed
Electric Vehicles Now Pay the Full 6.625 Percent
From January 2004 until late 2024, buyers of battery-electric and fuel-cell vehicles paid no New Jersey sales tax. P.L. 2024, c. 19 ended that exemption and phased the tax in over nine months.2New Jersey Division of Taxation. Zero Emission Vehicles Exemption
- From October 1, 2024 through June 30, 2025, zero-emission vehicles were taxed at 3.3125 percent, half the statewide rate.
- On and after July 1, 2025, the full 6.625 percent applies, putting EVs on the same tax footing as gasoline cars.3New Jersey Legislature. P.L. 2024, Chapter 19
In dollars, a $50,000 EV bought during the transition window carried about $1,656 in sales tax. The same vehicle bought on or after July 1, 2025 costs $3,312.50 in tax. A $60,000 EV now generates $3,975 in sales tax that did not exist before October 2024.2New Jersey Division of Taxation. Zero Emission Vehicles Exemption
The Federal EV Credit Expired at the Same Time
The federal clean vehicle tax credits expired for vehicles acquired after September 30, 2025. That includes the New Clean Vehicle Credit of up to $7,500 for new EVs, the Previously-Owned Clean Vehicle Credit of up to $4,000 for used EVs, and the Qualified Commercial Clean Vehicle Credit. None are available for vehicles purchased in 2026.4Internal Revenue Service. Clean Vehicle Tax Credits
A buyer who signed a binding written contract and made a payment before October 1, 2025 can still claim the credit, provided the vehicle is placed in service in the buyer’s possession. Anyone shopping for an EV in 2026 faces both the full New Jersey rate and no federal offset, a swing of potentially $11,000 or more compared with the same purchase two years earlier.4Internal Revenue Service. Clean Vehicle Tax Credits
What the FY2026 Budget Proposes to Tax Next
The governor’s FY2026 budget would extend the 6.625 percent sales tax to several things that aren’t taxed today. The proposed additions include:
- Participatory sports
- Interior design services
- Vehicle trade-in values
- Digital services
- Second-hand airplane sales
- Certain complimentary meals and hotel rooms
- Horse training
The proposal would also strip the partial sales tax exemption and $20,000 tax cap that currently apply to high-cost boats and vessels.5New Jersey Legislature. FY 2026 Tax and Revenue Outlook
On the other side, the same budget proposes new exemptions for baby products and sunscreen. The state estimates the full package would bring in roughly $277 million a year in additional revenue. These proposals require legislative approval and are not yet law.5New Jersey Legislature. FY 2026 Tax and Revenue Outlook
How the Current 6.625 Percent Rate Got There
The 6.625 percent rate took effect on January 1, 2018. Before that, the rate had been 7 percent. The legislature reduced it in two steps, to 6.875 percent on January 1, 2017, and then to 6.625 percent a year later.1Justia. New Jersey Code 54:32B-3 – Taxes Imposed The use tax rate on out-of-state purchases brought into New Jersey matches the sales tax rate, so it is also 6.625 percent.6New Jersey Division of Taxation. Use Tax FAQ
If you buy something from an out-of-state retailer that doesn’t charge New Jersey tax, you owe the same 6.625 percent as use tax. Credit is given for sales tax properly paid to another state, so you only owe New Jersey the difference. Individuals report use tax on Form NJ-1040, and the Division of Taxation publishes an estimated use tax chart by income band for people who don’t track every purchase: a household earning $50,001 to $75,000 owes an estimated $84, while households over $200,001 owe the lesser of 0.852 percent of income or $494.6New Jersey Division of Taxation. Use Tax FAQ
Urban Enterprise Zones Still Charge Half
Not everyone in New Jersey pays 6.625 percent on in-person purchases. Certified businesses operating in one of the 37 Urban Enterprise Zones, which include Newark, Jersey City, Camden, Trenton, and Paterson, charge customers 3.3125 percent on most tangible personal property bought in person at the store.7New Jersey Department of Community Affairs. UEZ Locations8New Jersey Division of Taxation. Urban Enterprise Zone The business has to be certified through the UEZ program and keep that certification current to offer the reduced rate.
If You’re a Business Collecting the Tax
Businesses that collect sales tax but miss the deadline to remit it owe a 5 percent penalty on the unpaid amount. Interest accrues at three percentage points above the prime rate, compounded annually, and the interest calculation stacks: it is assessed on the unpaid tax, any penalties, and any previously accrued interest.9Legal Information Institute. New Jersey Administrative Code 18:2-2.4 – Failure to Pay on Time The 5 percent penalty can be waived if the taxpayer shows reasonable cause for the late payment, but the burden of proof is on the taxpayer. Interest accrues regardless of the reason.