Summary
- Cerussi bought his Tesla S 8 years ago in New Jersey without paying sales tax
- New Jersey is ending this sales tax exemption for electric vehicles
- There will be higher taxes and fees for electric vehicles in New Jersey now
- New Jersey trails only 4 states in total EV registrations
- The shift to charging sales tax and registration fees for EVs is seen as fair by some and conflicting by others
Article
Charlie Cerussi purchased his Tesla S eight years ago, benefiting from a sales tax exemption in New Jersey. This exemption saved motorists thousands of dollars on new electric vehicles, helping the state reduce greenhouse gas emissions and combat climate change. However, this incentive is now coming to an end, with electric vehicle buyers facing higher taxes and fees to raise revenue for the state budget and the Transportation Trust Fund. The Murphy administration believes it is time to bring EVs on equal tax footing with gas-powered cars, pointing out that prices on no-emission vehicles have decreased and buyers still have access to state and federal incentives.
New Jersey ranks at the bottom for EV charging stations, making it challenging for EV owners to find places to charge their vehicles. The state has set aside $50 million in the budget for rebates of up to $4,000 for low- and moderate-income residents purchasing EVs, while federal tax credits of up to $7,500 are also available for EV buyers. However, automakers and environmental groups have criticized the decision to phase out the sales tax exemption, saying it will make reaching Governor Phil Murphy’s goal of having 330,000 plug-in EVs registered in 2025 even more difficult.
As of June, the state had 185,458 registered EVs, with EV sales accounting for 12.2% of all vehicle sales in New Jersey in 2023. Nonetheless, New Jersey still trails other states like California, Florida, Texas, and Washington in the total number of EV registrations. Governor Murphy has set a goal for 100% of new vehicle sales to be electric by 2035. The tax and registration fee changes will gradually phase out the sales tax exemption for zero-emission vehicles, introducing new costs for EV buyers that could impact their decision to purchase electric vehicles in the future.
While the Sierra Club’s New Jersey chapter has criticized the tax and registration fee changes, others, such as the New Jersey Chamber of Commerce, believe it is fair to start charging EV drivers for their use of the transportation system. Thomas Bracken, president and CEO of the New Jersey Chamber of Commerce, argued that EV drivers need to contribute to maintaining and repairing the roads they use, similar to other vehicles that pay fuel taxes. However, the decision to impose these fees on EV users while aiming to increase EV sales in the state has raised concerns about the impact on achieving the state’s environmental goals.
Automakers and environmental groups have expressed concerns that the changes to tax policies may affect the state’s ability to reach its EV goals. The decision to phase out the sales tax exemption for zero-emission vehicles could deter potential buyers, affecting the overall adoption of electric vehicles in New Jersey. While some believe the tax and fee changes are necessary to ensure fairness in funding infrastructure maintenance, others argue that it may contradict the state’s efforts to become a leading EV state. The economic theory of whether financial incentives drive EV sales or if buyers are motivated by environmental concerns is being put to the test in New Jersey with these policy changes.
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