Department of Environmental Protection

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Air Quality, Energy & Sustainability

Drive Green

Sales and Use Tax Exemption

Legislation enacted in New Jersey in January 2004 provides a sales tax exemption for zero emission vehicles (ZEVs), which are battery-powered or fuel-cell powered vehicles pursuant to the California Air Resources Board zero emission standards for the model year.

SALES TAX EXEMPTION - ZERO EMISSION VEHICLES (ZEV) (N.J.S.A. 54:32B-8.55)

The New Jersey Sales and Use Tax Act provides a sales and use tax exemption for zero emission vehicles (ZEVs), which are vehicles certified pursuant to the California Air Resources Board zero emission standards for the model year.

The exemption is NOT applicable to partial zero emission vehicles, which includes hybrids such as the Toyota Prius and Honda Civic Hybrid. The exemption is also NOT applicable to labor or parts for qualified vehicles.

The definition of "sale" in the law includes rentals and leases. Thus, the exemption is applicable to the sale, rental or lease of a new or used zero emission motor vehicle on and after May 1, 2004.

Motor Vehicle Dealers, Leasing and Rental Companies and Other Vendors: In order to document the exemption for the sale or rental of a qualified zero emission vehicle, the customer should complete an Exempt Use Certificate (ST-4) and insert the statutory reference "N.J.S.A. 54:32B-8.55."

The following vehicles have been certified by the Commissioner of the New Jersey Department of Environmental Protection (DEP) as qualified Zero Emission Vehicles and thus, are exempt from New Jersey sales and use tax:

How to receive your sales tax exemption:

For new vehicles:Remind the dealership to complete an Exempt Use Certificate that you should keep a copy of. Make sure to cite N.J.S.A. 54:32B-8.55 as the statutory reference.

For used vehicles: The person you are buying the vehicle from should complete the Exempt Use Certificate citing the above reference. When you go to register your vehicle at the Motor Vehicle Commission, bring the Certificate. You will need to present it at that time to be exempt from paying sales tax.

Email us at Drivegreen@dep.nj.gov or call (609)292-7953.

Exempt Use Certificate – Form ST-4 Motor Vehicle Commission Instructions