New Jersey Governor Phil Murphy recently signed into law a new EV road tax, making it the highest in the nation. Starting in July, New Jersey EV owners will need to pay an annual $250 road tax fee, increasing by $10 each year until it reaches $290 in 2028. This fee will be included in the upfront payment for buyers and leasers of new electric vehicles, making the initial cost $1,060 more than it is currently. The higher upfront cost of electric vehicles has been a significant barrier to adoption, and this new tax may further discourage residents from buying EVs.
The new EV road tax in New Jersey has led to criticism from both EV owners and industry professionals. Many believe that the tax is premature, as electric vehicles only make up about 1.8% of the total light vehicle fleet in the state. Critics argue that EVs should only start paying their fair share of road taxes once they reach a higher adoption rate. Additionally, the new law will phase out the sales tax exemption for battery electric vehicles, further increasing the cost of owning an EV. The combination of the road tax and the sales tax phase-out has put New Jersey in a position where it may cost more to own an electric vehicle than a combustion vehicle in the state.
Pam Frank, the CEO of ChargEVC, a non-profit organization promoting the growth of the electric vehicle market in New Jersey, has spoken out against the new EV tax. In a letter to the New Jersey Senate Budget and Appropriations Committee, ChargEVC urged lawmakers to reconsider the $250 annual fee, which could hinder progress towards the state’s clean energy and EV adoption goals. The organization argues that the tax would negate the impact of existing rebates and credits, potentially reducing EV sales by over 10%. ChargEVC recommends amending the law to reduce the annual fee to a more reasonable amount, such as $75, in support of New Jersey’s efforts to increase EV adoption.
Critics of the new EV tax also highlight the economic implications for EV owners. Under the new law, EV owners would pay nearly twice as much in road tax per year compared to owners of comparable gas-powered vehicles. Charging EV drivers higher fees than gas-powered vehicles, especially when EVs are more environmentally friendly, is seen as unfair. Some argue that EV drivers should be rewarded for driving clean vehicles, rather than being penalized. It is also noted that EVs already pay sales tax when charging at public fast chargers, adding an extra financial burden that gas-powered vehicles do not carry.
Despite the new EV road tax, there is a strong belief that the tax structure should be fair to support the state’s goals of increasing EV adoption and reducing emissions. Suggestions for a more equitable fee structure, based on EV adoption rates, are put forth to ensure that EV owners are contributing their fair share. As New Jersey aims to ban the sale of new combustion vehicles by 2035, it is crucial to implement policies that support this transition rather than hinder it. The discussion on incentives and fees for EVs continues to spark debate, with differing opinions on the most effective way to encourage clean vehicle adoption.
