The statewide rate for used car sales tax in New Jersey is 6.625% of the vehicle’s purchase price. On top of that, you must pay additional fees, like ownership transfer and license plate costs.
Also, we’ve got some great news for Jersey residents: the Garden State does not impose county and city sales taxes.
How much tax will I pay?
Do You Pay Taxes On a Used Car From a Private Seller in New Jersey?
For a complete insight into the sales tax rates in New Jersey, see the official guide to motor vehicle purchases issued by the state of New Jersey.
Aside from the sales tax, other fees involved with purchasing a used car may include registration fees, title fees, and license plate fees.
Title and License Fees
Title fees include the cost of new license plates. When you buy a used car from a private party, the seller must remove the license plates from the car, so you must obtain and pay for new license plates. Check out how much new license plates cost in New Jersey.
You have 10 days to complete the title transfer once you’ve made the transaction. Otherwise, you’re subject to a $25 late fee.
New Jersey Registration Fees
When registering the vehicle in New Jersey, you must also provide proof of auto insurance. If you need a duplicate or a replacement of original registration documentation, the MVC will charge you $5.
You can apply for an online registration renewal right here.
How does NJ calculate tax?
How is Used Car Sales Tax Calculated in New Jersey?
Some people get the brilliant idea to negotiate a low “official” purchase price and pay the remainder off the books. That won’t work, as the New Jersey Motor Vehicle Commission is way ahead of you.
People who try to avoid paying the full vehicle tax by artificially lowering the price they paid for the car will be let down. The MVC can simply use the car’s “fair market value” (rather than the car price) as the basis for calculating sales tax.
The New Jersey MVC establishes what the car is worth on the open market by referring to the Kelley Blue Book or other reliable sources of information about used car prices. If they conclude that the car’s fair market value is greater than the purchase price, the sales tax will be assessed based on the fair market value.
Can I avoid paying tax in NJ?
How to Avoid Paying Sales Tax on a Car in New Jersey?
Here are some tax exemptions for used vehicle purchases in the state of New Jersey:
- If you’re an heir or a trust beneficiary of the vehicle, you are exempt.
- If the vehicle was purchased, titled, and registered in another state by a New Jersey non-resident, New Jersey sales taxes do not apply. Non-residents must complete the Motor Vehicle Sales and Use Tax Exemption Report (Form ST-10).
- If the car was a gift, it is exempt from taxes. This falls under the tax exemptions Special Conditions that include mobile homes, resident service members, and disabled veterans.
- If the vehicle was acquired by the Federal government or one of its agencies, or State of New Jersey or one of its agencies, you qualify for an exemption.
- If the vehicle was acquired by the United Nations or any other international organization, you don’t pay the sales tax. For exempt organizations, you need to provide a valid Exempt Organization Certificate (Form ST-5)
- If the vehicle is 100% Zero Emission Vehicle (ZEV), you are exempt from paying taxes.
If you are a resident military member stationed out of state and purchase a vehicle outside of New Jersey but want to title it in New Jersey, you may delay paying sales tax until the vehicle is brought to New Jersey. Complete the Military Sales Tax Deferment Application (Form MD-1).
If you qualify for an exemption, fill out Form ST-4, and visit your local motor vehicle agency.
If you plan to move to a state with no sales tax, try purchasing the car after your relocation. Otherwise, we don’t recommend attempting to avoid paying car sales tax in New Jersey or anywhere else. The thousands of dollars you might save are not worth the legal and financial implications, nor the loss of your peace of mind.
How to pay NJ car tax?
How to Pay New Jersey Vehicle Sales Tax
1. You and the seller each complete the Vehicle Bill of Sale. When you buy the car on PrivateAuto, we provide an official New Jersey bill of sale and prompt both of you to sign it in our app at the appropriate stage of the transaction process.
2. Calculate the amount of sales tax due depending on the tax rate for your city and county. You can use our sales tax calculator to make things easier.
3. Complete the Sales and Use Tax Form (Form ST-18) and bring it, along with the computed sales tax amount, to the county tax office.
4. Pay the sales tax and any other fees that apply, such as title and registration fees.
5. Get a receipt for your payment.
6. If applicable, the county tax office will process your payment and provide your registration and license plates.
7. Once you’ve paid the sales tax and turned in the necessary paperwork, you’ll get your new registration and title for the car. The title and registration will show that you bought the car and that the sales tax has been paid. You will also get new license plates.
Many people believe that buying a car from a dealer is much easier than preparing all of the paperwork themselves. Dealers are certainly more convenient in terms of paperwork, but their services might be pricey. Dealerships impose a “documentation fee” in addition to the state taxes. The average documentation fee in New Jersey is $335.
Avoid documentation fees and get lower prices when you buy used cars from private sellers right here on PrivateAuto. Read how to buy a car from a private party for more details.
Buy and Sell Used Cars on PrivateAuto
PrivateAuto allows you to negotiate the price you want, schedule the test drive meetup, and pay for the car—all within our app without compromising your personal information.
Whether you want to shop used vehicles for sale or are trying to sell your used car for top dollar, PrivateAuto will help you get the deal done.
Get started with PrivateAuto today.
Here’s how you can sell your car in New Jersey with a few simple steps.
1. Gather necessary documentation
You’ll need your vehicle title and other documentation. Have all the paperwork you need to sell your car privately, so you’re not scrambling to find it at the moment of completing a sale.
2. Register on PrivateAuto and get verified
To make PrivateAuto a safe place for everyone, we require email, phone, and driver’s license verification, including facial recognition.
3. List your car
Easily create your PrivateAuto listing with our step-by-step guide. Bonus: we include a window brochure with a QR code scannable to your listing.
4. Set your terms
It’s your car, so you drive the deal! You can control where, when, and who you meet. Decide whether to accept only ID-verified buyers, or buyers with verified funds. Don’t waste your time with buyers who aren’t verified to your preference.
5. Vet incoming offers
Manage offers in one place with the ability to accept, reject, or counter offers within the app. Listing on multiple sites? Filter all communications through PrivateAuto by sharing your listing link on all platforms. Your personal info is protected: no more giving out your phone number or email address. All communication happens in our app.
6. Choose a buyer
When you find an offer you like, accept it and proceed to the next step with that buyer.
7. Schedule a meeting
The buyer will want to look at your car. No more back and forth texts. You never have to give out your phone number. Rather, use our handy scheduling feature to schedule test driving and coordinate a time and place for meeting. (Oh, and you’ll be able to finalize the transaction instantly at the first meeting, FYI.)
8. E-sign documents
After the buyer is satisfied with your car and the two of you have agreed on a purchase price, you can easily e-sign the bill of sale within our app, from your phone. With our shared documents feature, you can easily locate the paperwork needed after the sale.
9. Get paid, instantly
Before PrivateAuto, receiving funds was the most stressful part of the entire selling process, especially for any used car sale over $5,000. There just aren’t a lot of good ways to move large amounts of money quickly and conveniently. Those days are over! Verify and receive funds instantaneously with PrivateAuto Pay, our innovative banking integration. Guaranteed funds for transactions large and small.
10. Transfer title
When you sell your vehicle, fill out the necessary information on the back of the Certificate of Title and sign in order to transfer ownership of the vehicle to the new owner.
NJ Used Car Sales Tax FAQ
Who pays sales tax on a used car in NJ?
The person who buys a used car in New Jersey is accountable for paying the sales tax.
If you purchased your vehicle from a private seller, both you (the buyer) and the seller must complete the bill of sale and the Sales and Use Tax Form. If there is a lien on the vehicle, the seller will usually need to sign an affidavit as well. The New Jersey Motor Vehicle Commission will calculate and collect the sales tax and issue a sales tax receipt.
Do Urban Enterprise Zones Taxes Apply to Motor Vehicles?
Motor vehicles do not fall under tax relief incentives for Urban Enterprise Zones (UEZs).
The sales tax rate is lower in some areas of New Jersey that are suffering from economic distress. Urban Enterprise Zones meet other taxing criteria that are meant to encourage economic growth and development. The sales tax rate in the UEZs is reduced to 3.3125%.
Read more about the UEZs on New Jersey’s official website%3B).
What is a temporary tag?
Paper license plates, also known as temporary tags, are issued to car buyers as a temporary registration. They are also issued for demonstration cars in dealerships, vehicle transfers, or loaned cars. In NJ, temporary tags are usable for 30 days.
Is a car inspection necessary in NJ when buying a used car?
Whether you buy a new or a used car in the state of New Jersey, your vehicle must pass inspection. Before they can be registered and driven, all used cars sold in New Jersey must pass a safety and emissions check.
Many vehicles sold in New Jersey fail to meet the New Jersey Motor Vehicle Commission’s inspection regulations. If a car fails inspection, it is unlikely that the owner will be able to drive the vehicle on state roads. The New Jersey Used Vehicle Inspection Law protects customers of used vehicles from this risk.
Do I get the manufacturer’s warranty on a used car?
Used cars, unlike new vehicles, rarely come with the manufacturer’s warranty. Most used cars do not come with a warranty and are sold “as is.”
Some dealerships are willing to provide their own warranties or extended service plans for an additional fee. Before committing to purchase a warranty or service plan, make sure you read and understand the conditions.
You can get a decent coverage for your used vehicle by purchasing a used car warranty. Take a look at some of the best used car warranty companies.
Is there a Lemon Law in NJ for used cars?
The Lemon Law in the state of New Jersey applies only to used cars purchased from a used car dealer. Here’s a list of used motor vehicles not covered by the NJ Lemon Law:
1. Motor vehicles are sold for less than $3,000
2. Motor vehicles are more than seven model years old
3. Motor vehicles that have been declared a total loss by an insurance company
4. Motor vehicles that have odometer readings of more than 100,000 miles
5. Motor vehicles that are sold “as is”
Can I take the used car for a test drive?
Not only can you do it, but you should definitely take a test drive in a used car you’re planning on buying.
A test drive is one of the most critical procedures when purchasing a used car. A thorough test drive will tell you if the vehicle is perfect for you, whether you’re buying from a private party, an independent used car dealer, or even a certified used automobile from a licensed new car shop.
You can schedule a test drive with the seller with just a click of a button, right here on PrivateAuto.
Jacob Andra
Contributing Author
Jacob Andra is an entrepreneur, author, and technology expert living in Salt Lake City, Utah. As a stakeholder in PrivateAuto, Jacob is passionate about how our technology is bringing peer-to-peer car sales into the 21st century. When he’s not working, Jacob can be found playing pickleball, climbing mountains, or spending time with his family.