While most states push for the adoption of EVs, New Jersey Governor Phil Murphy has unplugged the state’s pro-electric-vehicle position. The Governor signed a new EV tax that is the highest of its kind in the nation. The bill states that New Jersey EV owners must pay an annual $250 road tax fee starting in July.
According to reports, the newly imposed EV tax is an effort to offset the state’s loss in fuel tax revenue. The new fee will increase by $10 each of the next four years until it reaches $290 in 2028. In addition, New Jersey requires buyers and leasers of all new vehicles to pay four years of registration fees upfront.
In a shocking twist, the new EV fee will be included in their initial payment. Therefore, by July 2024, any new EV purchased or leased in New Jersey will cost $1,060 more. In an already failing EV market, that’s considerably damaging. The higher initial cost of an electric vehicle is one of the biggest impediments to EV adoption.
Adding an EV tax would drastically affect the market, especially in the Garden State. Buyers of new EVs in New Jersey won’t be smiling at the additional costs. When they find out they must pay a road tax fee of $1,060, buyers will probably stick to their gas-powered cars.
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With the new bill signed, residents of New Jersey, especially EV owners, condemn the law. They criticized Murphy for prematurely signing an “unreasonable tax” on clean-energy vehicles. Many believe EVs should pay their fair share of road taxes to help fund the state’s infrastructure repair and development.
However, they believe that should start when electric vehicles become 5% of the total light vehicle fleet in the state. According to estimates, the figure currently stands at about 1.8%. Furthermore, residents say they would support a similar amount to what gas-powered vehicles pay yearly through the state’s gasoline tax.
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However, Murphy’s law will require EV owners to pay twice as much as the owners of a comparable gas-powered vehicle. Unfortunately, the pain doesn’t stop there. Since 2004, battery electric vehicles (BEVs) have enjoyed a sales tax exemption in New Jersey.
However, that luxury will now begin a three-year phase-out period. The sales tax exemption has given residents enormous incentives to ditch the pump. It also helped to close the gap between the cost of a comparable combustion vehicle and the more expensive EV.
Residents understand that the sales tax exemption will not last forever. But they hoped it would stay until EVs were near cost-parity with combustion vehicles. Sadly, many still need the incentives to afford an EV today and for the next few years.
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Hence, the sales tax announcement and the new EV road tax shook New Jerseyians who hoped to make the switch. With the recent changes, the state is going through a bad transition. Once one of the best states to buy an EV, it will, over time, cost more to own one.
Starting this July, new electric vehicles at New Jersey Dealerships will come with an additional $1,060 road tax bill. However, at this time, when the state claims to be pro-EV, this new road tax is unfair and punitive. It will work against the state’s 2035 goal to ban the sale of new combustion vehicles.
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