09 Jul What sales tax is due when I buy a used car?

Q. Is there a cap on the N.J. sales tax on a used motor vehicle? I read that tax is capped at $525 no matter the price of the car.
— Car buyer

A. Here’s a great lesson not just about sales tax, but about internet searches.

We’re guessing you did a Google search.

The first link that pops up says: “New Jersey collects a 7% state sales tax rate on the purchase of all vehicles. The maximum tax that would have to be paid is 525 dollars.”

And that is the problem with relying on the internet, said Gail Rosen, a Martinsville-based certified public accountant.

“This is incorrect. The Google search refers to a non-official website,” Rosen said. “One must be careful to search in the official State of New Jersey website for this information.”

The correct answer is that you pay a New Jersey sales tax of 6.625 percent on the purchase price of a new or used vehicle, less the value of the trade-in, Rosen said.

“There is no maximum tax limit,” she said. “The computation is the actual purchase price of the car multiplied by 6.625 percent.”

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This story was originally published on July 9, 2019.

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