The New Jersey Independent Automobile Dealers Association (NJIADA) scored a significant victory for both dealers and consumers, ensuring that vehicle trade-ins will continue to reduce the sales tax base in the state.
“This is a tremendous win for our industry and the consumers we serve,” said Paula Frendel, CAE, Executive Director of NJIADA. “We thank the members of the 2026 Budget Committee for recognizing the importance of this policy and for taking NJIADA’s comments into consideration.”
Governor Phil Murphy’s original 2026 budget proposal included eliminating the current sales tax credit on trade-in vehicles. Under the proposal, consumers would have paid sales tax on the full purchase price of a new vehicle rather than the price minus the trade-in value, resulting in higher costs and potentially lower vehicle sales statewide.
Industry leaders, including NJIADA, strongly opposed the change, citing the financial burden it would place on consumers and the potential impact on dealerships across New Jersey.
In the final version of the budget, signed into law by Governor Murphy on June 30, the proposed elimination of the trade-in tax credit was not included. The current policy remains intact, with trade-in values continuing to reduce the taxable amount of a new vehicle purchase.
This outcome highlights the impact of advocacy and underscores the importance of industry engagement in shaping public policy decisions.
