What is the sales tax on a $25,000 car in New Jersey?
It’s $1,656.25, based on New Jersey’s statewide 6.625% sales tax, assuming no trade-in, discounts, or exemptions and excluding DMV fees. New Jersey taxes most motor-vehicle purchases at a uniform statewide rate, with notable exceptions such as a full sales tax exemption for qualifying zero-emission battery-electric vehicles.
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How New Jersey calculates car sales tax
New Jersey’s Sales and Use Tax rate is 6.625% statewide and has remained at this level since January 1, 2018. For most car purchases, the tax applies to the taxable price of the vehicle, which generally equals the purchase price minus any trade-in allowance and after dealer discounts. Manufacturer rebates, however, are typically included in the taxable price. Reduced-rate zones do not apply to motor vehicles.
On a straightforward $25,000 purchase with no adjustments: $25,000 × 0.06625 = $1,656.25 in sales tax.
Scenarios and examples
The following examples illustrate how common situations can change the taxable amount and the tax due in New Jersey.
- Baseline: $25,000 purchase, no trade-in or discounts → tax = $1,656.25.
- With a $5,000 trade-in: tax applies to $20,000 → tax = $1,325.00.
- With a $1,000 dealer discount: tax applies to $24,000 → tax = $1,590.00.
- With a $2,000 manufacturer rebate: tax still applies to $25,000 (rebates don’t reduce the taxable price) → tax = $1,656.25.
- Qualifying battery-electric vehicle (ZEV): exempt from NJ sales tax → tax = $0.00.
In short, trade-ins and dealer discounts reduce the taxable price; manufacturer rebates generally do not. Electric vehicles that meet New Jersey’s zero‑emission criteria are fully exempt.
Which fees are taxed with a car purchase?
Some charges are part of the taxable sales price, while others—especially government-imposed fees—are not. Knowing the difference helps you estimate your out-the-door cost accurately.
Common taxable items
These dealer-imposed charges and add-ons are typically included in the taxable price of a motor vehicle in New Jersey.
- Dealer documentation/processing fees.
- Dealer-installed accessories and aftermarket add-ons (e.g., alarms, paint protection, window etching).
- Extended service contracts and maintenance plans that cover repairs or maintenance.
- Destination or delivery charges included in the vehicle’s selling price.
Because these charges are part of what you pay the dealer for the vehicle and related benefits, they’re generally treated as taxable receipts.
Common non-taxable items
The following items are generally not subject to New Jersey sales tax when separately stated and remitted as government fees or exempt products.
- Title, registration, and plate fees paid to the New Jersey Motor Vehicle Commission.
- State-imposed environmental or tire fees (charged per new tire) collected and passed through to the state.
- Government inspection or emissions fees.
- Insurance products such as GAP insurance (as regulated insurance, not taxable as a retail sale).
These charges are not considered part of the taxable sales price because they are governmental fees or exempt financial products.
Exemptions and special cases to know
Certain transactions qualify for exemptions or special treatment under New Jersey law, which can significantly alter the tax you owe.
- Zero-emission battery-electric vehicles (BEVs) are fully exempt from NJ sales and use tax. Plug-in hybrids are not exempt.
- Out-of-state transactions: If the vehicle is delivered and used out of state, the sale may be exempt in NJ; if you title/register the vehicle in New Jersey, NJ tax (or use tax) is generally due, with credit for any tax properly paid to another state.
- Resale by licensed dealers: Vehicles purchased for resale with a valid resale certificate are exempt.
- Trade-in credits apply only when trading a motor vehicle toward another motor vehicle; unrelated items typically do not reduce the taxable base.
If your situation falls into one of these categories, confirm documentation requirements with the dealer or the New Jersey Division of Taxation before purchase.
Bottom line
On a $25,000 car in New Jersey, the sales tax is $1,656.25 at the 6.625% statewide rate—unless the vehicle is a qualifying battery-electric model, which is exempt. Trade-ins and dealer discounts can lower the taxable price; manufacturer rebates generally do not. Government fees like title and registration are separate and not taxed.
How to avoid paying sales tax when buying a car?
Yes, there is a way to avoid sales tax on used and new vehicles. Trade in a vehicle. You get a credit against the purchase for purposes of sales tax. That’s the only way.
How much is tax and title on a car in NJ?
The 6.625% tax will be assessed on your vehicle, even if you bought it from a US state with a lower tax rate. As a New Jersey motorist, you will also need to pay registration and/or title transfer fees. Most drivers will pay a flat $60 fee for title transfers.
How much is the tax on 20000 in NJ?
Income Tax Brackets
| Single Filers | |
|---|---|
| New Jersey Taxable Income | Rate |
| $20,000 – $35,000 | 1.750% |
| $35,000 – $40,000 | 3.500% |
| $40,000 – $75,000 | 5.525% |
How do I calculate sales tax on a car in NJ?
According to NJ.com, the state assesses a 6.625 percent sales tax on the purchase price of any used or new vehicle. To calculate how much sales tax you’ll owe, simply multiple the vehicle’s price by 0.06625. For example, a $15,000 car will cost you $993.75 in state sales tax.
