What do you need to know about the New Jersey sales tax?

Summary 

What is the New Jersey sales tax? 

The New Jersey sales tax is a consumption tax levied on the sale of most tangible personal property, specified digital products, and certain services within the state. Businesses must know how to pay sales tax in New Jersey and that individuals understand how it is calculated as it affects their cost of living. This ensures that the correct taxes are charged, paid, and accounted for.  

The current base statewide sales tax rate in New Jersey is 6.625%. This rate applies to most purchases unless specifically exempted by law.  

New Jersey state sales tax does not include local sales taxes imposed by counties or municipalities. The 6.625% base rate is consistent throughout the state. 

Additionally, New Jersey supports 32 Urban Enterprise Zones (UEZs) that encompass 37 economically distressed cities. Certified businesses may purchase certain goods and services exempt from sales tax or at a rate of 3.3125%. 

How do you calculate the sales tax in New Jersey by city? 

Knowing how to calculate sales tax in New Jersey is simple, as it stays the same from city to city and county to county.  

So whether you live in Bayonne, Edison, Hamilton, or Woodbridge, you will pay the same amount of tax:  

How do you calculate the New Jersey sales tax by county? 

As New Jersey does not have local sales taxes, the amount of tax you pay is the same across the various counties.  

The table below shows the state sales tax rates in New Jersey across every county. 

What services are subject to sales tax in New Jersey? 

The 6.625% sales tax New Jersey imposes statewide on most goods and select services has exemptions for necessities like groceries and clothing under $175.  

Online and offline sales are taxed equally, but consumers are responsible for paying use tax on purchases from out-of-state online retailers who do not collect sales tax. 

New Jersey sales tax is due on the 20th of the month following the reporting period, which is usually quarterly but can be monthly for certain businesses. 

Are personal services subject to sales tax in New Jersey? 

Personal services are those provided directly to individuals for their personal well-being or enjoyment. 

Taxable personal services (6.625%): 

Exempt personal services: 

Services like healthcare and personal grooming are considered essential for well-being. Others, like fitness services, are exempt to promote health and wellness. 

What items are exempt from the sales tax in New Jersey? 

New Jersey exempts several essential goods and services from its 6.625% sales tax to make basic necessities more affordable and support key industries. 

Key exemptions include most unprepared food items, like fruits, vegetables, meat, dairy, eggs, bread, and cereal. This helps ensure access to healthy food for all residents.  

Most clothing and footwear items are also exempt, excluding accessories like jewelry and handbags. Prescription and non-prescription drugs are exempt, too, as this ensures access to necessary medications for both acute and chronic conditions. 

Other exempt items include medical devices like crutches, wheelchairs, and hearing aids. Newspapers and periodicals are also exempt to promote the dissemination of information. 

Does New Jersey's online sales tax differ from offline? 

The New Jersey sales tax rate of 6.625% applies equally to both online and offline purchases.  

However, the responsibility for collecting and remitting the tax can differ based on the seller's presence in the state. 

Responsibility for payment: 

Retailers with nexus in NJ: If the online retailer has a physical presence (nexus) in New Jersey, they must collect and remit sales tax just like a physical store. 

Marketplace facilitators: Online marketplaces like Amazon and eBay are responsible for collecting and remitting New Jersey sales tax on behalf of third-party sellers, even if those sellers lack a physical presence in NJ. 

Out-of-state retailers (no nexus): In this case, the consumer is technically responsible for paying the "use tax," which is equivalent to the sales tax. 

If a New Jersey resident buys an item online without paying sales tax, they are liable for the use tax. They can report and pay this tax either on their annual income tax return or by filing a separate use tax return with the New Jersey Division of Taxation. 

Get expert financial advice 

The New Jersey sales tax system applies a statewide rate to various goods and services. Understanding these details is crucial for businesses and consumers who want to know how to pay sales tax in New Jersey and comply with tax laws. 

For expert tax advice, let Unbiased match you with a financial advisor who can offer in-depth insights and reduce your tax liabilities wherever possible.