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Notice Sales and Use Tax Partial Exemption and Maximum Sales and Use Tax Imposition Amount for Sales and Uses of Boats and Vessels; Establishes Grace Period for Use Tax Imposition on Certain Boats and Vessels used by Resident Purchasers

(P.L. 2015, c. 170)

Amendment to the Sales and Use Tax Act, enacted December 9, 2015

P.L. 2015, c. 170 amends the Sales and Use Tax Act to provide a 50 percent Sales and Use Tax exemption on the sale of new and used boats or other vessels (including motorboats, sailboats, yachts, and cruisers) and caps the amount of Sales and Use Tax so that the most that the State can collect on a particular sale is $20,000. As a result, the Sales and Use Tax rate goes to half of the applicable rate. There is no further reduction of the Sales and Use Tax rate on sales in an Urban Enterprise Zone or in Salem County. The exemption and cap apply to purchases occurring on and after February 1, 2016. Because rental/lease transactions are treated as retail sales under the Sales and Use Tax Act, these changes also apply to rentals and leases of boats or other vessels.

In addition to the exemption and cap, for uses on or after January 1, 2016, the law allows a grace period for certain boats or other vessels purchased out of State by a New Jersey resident to be used in New Jersey for up to 30 days in a calendar year without triggering use tax so long as:

1. the boat or other vessel is legally operated by the resident purchaser and meets all current requirements pursuant to applicable federal law or pursuant to a federally-approved numbering system for boats and vessels adopted by another state; and

2. the resident purchaser is not engaged in or carrying on in this State any employment, trade, business, or profession in which the boat or vessel will be used in this State.

The Division is currently drafting regulations. Information regarding the administration of the new law will be posted to this website as it becomes available.

Frequently Asked Questions – Boats and Other Vessels Partial Sales Tax Exemption (half of the applicable Sales Tax rate); $20,000 Sales Tax Cap

Last Updated: Friday, 05/26/17

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