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No Sales Tax on the Part of the Car the VA Pays For

Where the U.S. Department of Veterans Affairs or the New Jersey Department of Veterans Affairs provides funds toward a disabled veteran's vehicle purchase, New Jersey does not charge sales tax on THOSE AMOUNTS. What it does charge on is the rest: money you put in yourself remains taxable. So on a car part-funded by a VA automobile grant, the tax is calculated on the balance, not on the whole price — which is a real saving and a common surprise at the dealership if nobody raised it beforehand.

Verified August 27, 2026

What this benefit is

Where the U.S. Department of Veterans Affairs or the New Jersey Department of Veterans Affairs provides funds toward a disabled veteran's vehicle purchase, New Jersey does not charge sales tax on THOSE AMOUNTS. What it does charge on is the rest: money you put in yourself remains taxable. So on a car part-funded by a VA automobile grant, the tax is calculated on the balance, not on the whole price — which is a real saving and a common surprise at the dealership if nobody raised it beforehand.

What it's worth: Sales tax not charged on the VA- or NJDVA-funded portion of the purchase

  • The exemption is LIMITED TO THE AMOUNTS FUNDED by the U.S. VA or the New Jersey DVA.
  • PERSONAL FUNDS REMAIN TAXABLE. It is a split, not a whole-vehicle exemption.
  • The veteran must be receiving vehicle-purchase funds from one of those two sources.
  • THE RESIDENCY TEST IS NOT ESTABLISHED from the sources reviewed.
  • The saving is New Jersey sales tax on the funded portion, so it scales with the grant.

Who is entitled to it

  • You served in the U.S. armed forces.
  • You have a service-connected disability.
  • New Jersey sales tax.

Not sure whether that describes you?

Answer a few questions about this benefit specifically — we only ask what this one actually depends on, and we stop as soon as we know.

How to claim it

  1. 1Tell the dealer BEFORE the paperwork is drawn up. Correcting the tax afterwards is far more work.
  2. 2Have the VA or NJDVA documentation showing the funded amount — the exemption is measured by it.
  3. 3Check the calculation: tax should fall on your own contribution only.
  4. 4If the dealer has not done this before, point them at the Division of Taxation's military page.
  5. 5Keep the documentation with the title papers in case the tax is queried later.
Form
Raised with the dealer at the point of sale
File with
The dealer, with the Division of Taxation behind it
Documents you will need
va benefit summary letter
No renewal
Once granted it does not need renewing.
Worth knowingThe VA automobile grant is the usual route into this. If you are applying for that grant, raise the sales tax question at the same time rather than at the showroom.

Sources

This finder provides an informational match, not a government eligibility determination. The responsible agency decides your application.