Purchasing a vehicle in New Jersey involves more than just the sticker price. Understanding the New Jersey Car Sales Tax is crucial for a smooth and financially sound car buying experience. As a car owner in NJ, or someone looking to buy a car here, knowing the ins and outs of vehicle sales tax will save you from unexpected fees and penalties. This guide breaks down everything you need to know about New Jersey car sales tax, ensuring you’re well-prepared whether you’re buying from a local dealer or out of state.
Understanding New Jersey Car Sales Tax
In New Jersey, sales tax is a part of almost every vehicle purchase. Generally, if you buy a car from a New Jersey dealership, they are responsible for handling the title and collecting the sales tax for the state. This simplifies the process for you as the buyer. However, there are situations where you might need to pay the sales tax directly to the New Jersey Motor Vehicle Commission (MVC).
Sales Tax When Buying from a New Jersey Dealer
New Jersey dealerships are mandated to collect sales tax from NJ residents at the point of sale. This means when you finalize your purchase at a local dealership, the sales tax is already calculated and included in your total cost. You typically won’t need to worry about paying sales tax separately at the MVC when you title your vehicle, as the dealer handles this on your behalf. The Manufacturer’s Certificate of Origin (MCO) should be stamped to show that the sales tax has been satisfied.
Sales Tax for Out-of-State Purchases
Purchasing a vehicle from an out-of-state dealer adds a layer of complexity. If the dealer is not authorized to collect New Jersey sales tax, you will be responsible for paying it when you title the vehicle in NJ. It’s essential to clarify the sales tax process with the out-of-state dealership before you buy. Upon titling your vehicle at an MVC Vehicle Center, you will need to pay the New Jersey sales tax based on the actual purchase price.
Paying Sales Tax Directly to the MVC
There are instances where you might need to pay sales tax directly to the MVC. This typically occurs if you didn’t pay sales tax at the time of purchase, such as buying from an individual or an out-of-state dealer who doesn’t collect NJ sales tax. In these situations, you must pay the sales tax at an MVC motor vehicle agency. Payment is based on the vehicle’s actual purchase price.
Sales Tax Exemptions
Certain vehicles are exempt from New Jersey sales tax. To determine if your vehicle qualifies for a sales tax exemption, you can refer to the list of exempt vehicles provided by the MVC. Knowing about potential exemptions can lead to significant savings.
Titling Your Vehicle and Sales Tax
Vehicle titling is closely linked to sales tax in New Jersey. When you purchase a vehicle, especially from a dealer, the titling process often includes verifying and processing sales tax.
Titling at the MVC
To title your vehicle, you’ll generally need to visit an MVC Vehicle Center in person. It’s advisable to schedule an appointment beforehand to avoid delays. When you go to title your vehicle, ensure you bring the Manufacturer’s Certificate of Origin (MCO) which should have a stamp indicating that the sales tax has been paid. You will need to pay sales tax if it hasn’t been already.
Required Documents for Titling
When titling your vehicle and addressing sales tax, make sure you have the necessary documents. This includes the Manufacturer’s Certificate of Origin (MCO), proof of purchase, and your driver’s license. If your vehicle is financed, you’ll also need the lien holder’s information, including their address and Entity Identification Number (EIN).
Titling Business Vehicles
For businesses registering vehicles, the process is slightly different. You must first obtain an EIN – Entity Identification Number. This is required to title and register a vehicle under a business name. You’ll also need to complete application form BA-8 before visiting an MVC Hybrid or Vehicle Service Center. This ensures that business vehicle titles are correctly processed.
Title Fees in New Jersey
There are fees associated with titling your vehicle in New Jersey. The standard title fee is $60. If your vehicle is financed with one lien, the fee is $85, and for vehicles with two liens, it’s $110. The MVC accepts various forms of payment, including American Express, MasterCard, Visa, Discover, checks, money orders, and cash.
Special Circumstances and Sales Tax
Certain situations require special attention when it comes to New Jersey car sales tax and titling.
Dealer Went Out of Business
If you purchased a vehicle from a New Jersey dealer who subsequently went out of business and you’re facing title issues, you need to follow a specific procedure. Gather all purchase documents and follow the instructions and forms provided by the MVC. Mail the documents to the MVC at the address provided, specifically to the Special Titles/Dealer Out of Business department. For complaints against the dealer, contact the New Jersey Division of Consumer Affairs.
Out-of-State Residents and NJ Purchases
If you are a New Jersey resident who purchased a vehicle out of state, there is a special procedure to follow for titling and sales tax. This procedure ensures that New Jersey residents who buy cars elsewhere comply with NJ tax laws.
Used Vehicles and Sales Tax
When purchasing a used vehicle, ensure the title transfer is properly completed. The previous owner must complete and sign the assignment section on the back of the title. While used vehicles are also subject to sales tax, the process is generally handled during the title transfer at the MVC.
Conclusion
Navigating New Jersey car sales tax doesn’t have to be complicated. Whether you’re buying a new or used car, from a dealer in NJ or out of state, understanding the process is key. Remember that New Jersey dealers typically handle sales tax, but for out-of-state purchases or private sales, you’ll likely pay it at the MVC when titling your vehicle. Always verify the sales tax obligations to avoid penalties and ensure a smooth car ownership experience in New Jersey.
For more information, you can refer to the National Motor Vehicle Title Information System.
