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NJ "Luxury Tax" surcharge on vehicle price > $45000 and EPA rating < 19 MPG

zingat

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Just purchased my 2019 JLUR 2.0T from Criswell Jeep, MD.
I live in NJ and this was an out of state purchase as Criswell provided for a good deal (8% below Invoice price).

On finalization of paper work with finance, I was informed about a "Luxury Tax" charged by the state of NJ.
https://www.nj.gov/treasury/revenue/njbgs/luxvehs.shtml
Details reveal that NJ has a surcharge of 0.4% of the sold price for vehicles priced above $45000 and with a EPA rating (fuel economy) of less than 19 MPG.

As per info from Jeep and EPA (FuelEconomy.gov), on paper the Jeep Wrangler Rubicon with 2.0T and Auto trans has the following gas mileage;

22 mpg - city
24 mpg - highway
22 mpg - combined

The final paper work included approximately $200 as luxury tax (0.4% on $500676).

The dealer seems to use a third party registration service of some sort (AutoRegUSA) that automatically calculates luxury tax if it owed. So now I am left wondering why the Luxury tax was assessed in the first place and how do I avoid it. The dealer has no way to bypass the system and I was informed that the dealer has to collect it on sale and that I must duke it out with NJ DMV when I file my registration and paper work.

Anybody here have to pay the NJ luxury tax and/or know how to avoid it?
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bilcol81

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Just purchased my 2019 JLUR 2.0T from Criswell Jeep, MD.
I live in NJ and this was an out of state purchase as Criswell provided for a good deal (8% below Invoice price).

On finalization of paper work with finance, I was informed about a "Luxury Tax" charged by the state of NJ.
https://www.nj.gov/treasury/revenue/njbgs/luxvehs.shtml
Details reveal that NJ has a surcharge of 0.4% of the sold price for vehicles priced above $45000 and with a EPA rating (fuel economy) of less than 19 MPG.

As per info from Jeep and EPA (FuelEconomy.gov), on paper the Jeep Wrangler Rubicon with 2.0T and Auto trans has the following gas mileage;

22 mpg - city
24 mpg - highway
22 mpg - combined

The final paper work included approximately $200 as luxury tax (0.4% on $500676).

The dealer seems to use a third party registration service of some sort (AutoRegUSA) that automatically calculates luxury tax if it owed. So now I am left wondering why the Luxury tax was assessed in the first place and how do I avoid it. The dealer has no way to bypass the system and I was informed that the dealer has to collect it on sale and that I must duke it out with NJ DMV when I file my registration and paper work.

Anybody here have to pay the NJ luxury tax and/or know how to avoid it?
To avoid this "luxury tax" move to Florida. No state income tax either! Otherwise vote out the liberals in NJ.
 

Agent47

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Just purchased my 2019 JLUR 2.0T from Criswell Jeep, MD.
I live in NJ and this was an out of state purchase as Criswell provided for a good deal (8% below Invoice price).

On finalization of paper work with finance, I was informed about a "Luxury Tax" charged by the state of NJ.
https://www.nj.gov/treasury/revenue/njbgs/luxvehs.shtml
Details reveal that NJ has a surcharge of 0.4% of the sold price for vehicles priced above $45000 and with a EPA rating (fuel economy) of less than 19 MPG.

As per info from Jeep and EPA (FuelEconomy.gov), on paper the Jeep Wrangler Rubicon with 2.0T and Auto trans has the following gas mileage;

22 mpg - city
24 mpg - highway
22 mpg - combined

The final paper work included approximately $200 as luxury tax (0.4% on $500676).

The dealer seems to use a third party registration service of some sort (AutoRegUSA) that automatically calculates luxury tax if it owed. So now I am left wondering why the Luxury tax was assessed in the first place and how do I avoid it. The dealer has no way to bypass the system and I was informed that the dealer has to collect it on sale and that I must duke it out with NJ DMV when I file my registration and paper work.

Anybody here have to pay the NJ luxury tax and/or know how to avoid it?
The link in your post says the following:
Effective July 15, 2006, new car dealerships are responsible for collecting a 0.4% surcharge on the new sale or lease of vehicles priced $45,000 or greater or on vehicles having an EPA rating of less than 19 miles per gallon.

They correctly collected it because of the vehicle price, the MPG is irrelevant because of the "or".
 

SinjinD

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The link in your post says the following:
Effective July 15, 2006, new car dealerships are responsible for collecting a 0.4% surcharge on the new sale or lease of vehicles priced $45,000 or greater or on vehicles having an EPA rating of less than 19 miles per gallon.

They correctly collected it because of the vehicle price, the MPG is irrelevant because of the "or".
In 2006, paying $45,000 or greater got you a luxury car. Paying that now basically gets you a mainstream car with all the bells and whistles. Law needs to be updated to keep current with luxury car pricing which probably starts in the $55k range now once basic options are added.

I'd move.
 
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zingat

zingat

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They correctly collected it because of the vehicle price, the MPG is irrelevant because of the "or".
Good catch ... I completely missed that.
DANG it ... those 2 letters 'or' cost me $100 each !
Dang you NJ ... I am moving to Florida ... or maybe Texas !
 

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Anybody here have to pay the NJ luxury tax and/or know how to avoid it?
How about you pay the taxes you legally owe? You don't like the tax, get out and vote. Or move.

EDIT: I just re-read the original post, I agree, it does sound like you were incorrectly charged the tax based on the window sticker mileage, if that is how the law is written.. Avoiding a tax and getting incorrectly charged a tax are 2 different things.
 
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Squibbles

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Got a 50k Jeep 8% below invoice, what did you save off msrp, 5500? 200$ is a drop in the bucket when spending over 40k on a vehicle. Also why didn’t you research the taxes before considering the Jeep? Washington would charge you sales tax for car purchases out of state where there was no tax, which screwed a lot of people over when they were blindsided by additional cost. You should always contact the MVD/DMV in both states before shopping out of state. My understanding was MD had excessive taxes as well.
 

Dkretden

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Good catch ... I completely missed that.
DANG it ... those 2 letters 'or' cost me $100 each !
Dang you NJ ... I am moving to Florida ... or maybe Texas !
Given the Tax regime there, I have a hard time understanding why folks voluntarily want to live in NJ.
 

LeaN69

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As a fellow NJ resident I can relate...

I don't understand what your question is tho, if your sale price is over $45k then it applies (you stated $50k and some change?)
I believe MPG portion is not applied to trucks and SUVs and is meant to target "performance" passanger vehicles. The sale price of my Jeep was $45,1xx and I had to pay it.

Also something I've learned by getting my Alfa from PA dealer who collected tax but did not do registration is DO NOT let the dealer do that, our motor vehicle personnel is not trained on how these things are taken care of and will tax you on tax collected as well. If you have to do your own plates and reg, tax is collected at the same time at MVC.
 

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Punkindave

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Good catch ... I completely missed that.
DANG it ... those 2 letters 'or' cost me $100 each !
Dang you NJ ... I am moving to Florida ... or maybe Texas !
But when you move to Florida you pay an "impact tax" on all vehicles brought in.
 

nypharm

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Yea I leased tons of cars from nj and ct. They both charge a luxury tax. I had them both waive since nys still has not started this type of tax. Yea real answer is vote these people out or move down south where we can keep roofs off our wranglers off 90% of the year.
 

Punkindave

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He will also have to pay NJ "exit" tax, if house is sold and you don't buy anther.
Hysterical, what do they do if you don't pay it?
Put a lien on your property that you don't own anymore?
Stop you at the border after closing?
Send a swat team to your new address to collect?

I left NJ in the mid 80's and never looked back.
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