Contrary to widespread belief the BMW i3 REx is not exempt from sales tax in New Jersey like it’s battery-only sibling. BMW have gone back on previous statements and franchise dealer instructions and confirmed that the i3 REx will need to pay New Jersey’s 7 per cent sales tax.
Electric and plug-in cars are subject to many different incentives from car pool lane access, to Government grants to — in some locations like New Jersey in the US and Norway in Europe — being exempt from sales tax. The BMW i3 REx is the range-extended version of BMW’s first mass produced electric car. It contains a small petrol engine that switches on when the battery gets low to keep the car driving along.
This is the second time BMW have messed up when it comes to the i3 REx and what incentives will apply to it. At the beginning of this year it was finally confirmed that the i3 REx would not be eligible for the Californian HOV-lane access White Sticker even though BMW were confident it would be.
Now, for the past months it has been claimed that the i3 REx is sales tax free, like the non-range-extended all-electric version. This has been so widely believed that dealers have even sold their first i3 REx cars without collecting sales tax. However it looks like this assumption was incorrect.
Speaking to GreenCarReports, Dave Buchko, of BMW’s product and technology communications group, said: “The sales tax exemption in NJ only applies to zero-emission vehicles–and as such, does not apply to the i3 with range-extender as it does not apply currently to any vehicle with an internal combustion engine. Any assumption that the i3 with range-extender would qualify was premature.”
In New Jersey sales tax on new cars is set at 7 per cent, meaning that customers who have bought the top model i3 REx for $56,025 need to pay an additional $3921.75.
In effect, this makes the REx in New Jersey cost even more. Elsewhere in the US it will cost a buyer an additional $3850 whereas in New Jersey including this option suddenly makes the whole cost of the car jump by 7%. In effect, the REx on a fully loaded i3 in New Jersey costs the consumer $7771.75.
Now the situation of sales tax has been confirmed, anyone buying the car from now on will pay the correct, and more expensive, price. But at the time of publishing we don’t know how BMW will handle the situation of the customers who already believe they have paid for their car.
Speaking to contacts who live in New Jersey it could be possible for this money owing to be paid off through the customer’s end of tax year accounting. If the car was bought outright, the Federal Grant for the car will more than cover this cost allowing the tax to be paid without the customer ‘spending’ any money. However many people who buy electric cars are expecting the federal grant to reduce other parts of their tax bill.
This also wouldn’t apply to customers who have bought their car with BMW’s leasing program called Owners Choice with Flex where the federal grant has already been ‘used’.
If you know your way around the ins and outs of sales tax in New Jersey and understand the legal implications of this, please do get in contact. We would love to know. Our experience of the UK tax system means that if this had happened in the UK the buyer would be forced to pay up – tax in the UK being the responsibility of the consumer even though it is all handled automatically. But we don’t know of the legalities in the US.
We have contacted BMW for an official statement on this and will update the story as we know more.
Do you live in New Jersey? Does this change your view on getting an i3 REx? Let us know.
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