Atlantic City Luxury Tax: Rates, Hotel Fees, and Filing

The Atlantic City luxury tax is a 9% municipal tax on lodging, entertainment, cover charges, and alcoholic drinks sold for on-premises consumption inside the city limits, authorized by N.J.S.A. 40:48-8.15.¹ It sits on top of New Jersey sales tax, and for most taxable purchases the two together come to 12.625%. Alcoholic beverages by the drink are the exception: the luxury rate on those drops to 3%, and the combined bill works out to 9.625%.²

What the Tax Applies To

N.J.S.A. 40:48-8.16 lists five categories of taxable sales inside Atlantic City:³

Alcoholic beverages sold by the drink for on-premises consumption at restaurants, bars, hotels, and similar venues.
Cover charges, minimum purchase requirements, and entertainment charges at restaurants, cafes, cabarets, hotels, and similar establishments.
Room rentals in hotels, motels, inns, bed-and-breakfast establishments, rooming houses, boarding houses, and transient accommodations.
Rentals of rolling chairs, beach chairs, and cabanas on the beach and boardwalk.
Admission tickets to theaters, movies, boardwalk piers, exhibitions, and amusement rides.

The Division of Taxation’s ANJ-17 guidance adds sightseeing rides, team rides, horoscope machines, fortune tellers, and bicycle rentals to the taxable list.⁴ One boundary worth knowing: admissions to boxing, wrestling, kickboxing, and other combative sports events are taxed under a separate statute and are not subject to the luxury tax.

What It Doesn’t Apply To

Several transactions that happen in the same places as taxable ones are outside the luxury tax entirely.

Packaged alcohol sold sealed for off-premises consumption, which carries only the regular 6.625% New Jersey sales tax.⁵
Food and nonalcoholic drinks consumed on premises, which carry state sales tax but no luxury tax.⁴
Rentals of meeting rooms, banquet halls, and other places of assembly, which are exempt from sales tax, the luxury tax, and the state occupancy fee.⁴
Purchases by New Jersey state agencies, political subdivisions, federal agencies, the United Nations, and international organizations the United States belongs to, when the purchase is on official letterhead or a purchase order and paid by the agency’s own check or voucher.⁴
Federal employee charges on a GSA SmartPay card that is centrally billed to the government.⁴
Casual sales and sales by churches and nonprofit charitable organizations.⁵

Nonprofits that hold a valid Form ST-5 catch a smaller break than they often expect. The certificate removes the 3.625% sales tax on a hotel room, but the 9% luxury tax and the 1% state occupancy fee still apply.⁴ A charity booking a block of rooms still owes most of what a regular guest would.

What You Actually Pay

When a sale is subject to both the luxury tax and New Jersey sales tax, the state reduces its sales tax rate from 6.625% to 3.625%. The combined rate on most taxable purchases is therefore 12.625%.⁵ For alcoholic drinks the luxury rate is 3% and the state keeps its full 6.625%, so the combined rate is 9.625%.²

Worked out across the main categories:

Hotel room for a stay under 90 days: 9% luxury tax + 3.625% sales tax + 1% state occupancy fee = 13.625%.
Admission ticket or cover charge: 9% luxury tax + 3.625% sales tax = 12.625%.
Cocktail at a bar: 3% luxury tax + 6.625% sales tax = 9.625%.
Sealed bottle from a liquor store: 6.625% sales tax only.

A single restaurant check can involve three different tax treatments at once. Food gets state sales tax, drinks get 9.625%, and the cover charge gets 12.625%.

Hotel Bills and Resort Fees

Lodging in Atlantic City carries more than the luxury tax and sales tax. The state occupancy fee is 1% here, reduced from the 5% that applies elsewhere in New Jersey because the city already imposes its own local tax on rooms.⁶ Casino hotels add further line items: a tourism promotion fee, a casino hotel room occupancy surcharge, a casino room fee, and a parking fee of at least $3 per day on casino hotel parking spaces. When any of those fees is passed through to the guest, it becomes part of the sales price and is itself subject to both sales tax and luxury tax.⁴

Resort fees are their own category. A mandatory resort fee the guest cannot opt out of is treated as part of the room price and taxed in full. An optional resort fee made up entirely of non-taxable services (gym access, pool access, Wi-Fi) escapes tax. If even one taxable item is bundled into an optional resort fee, the whole lump sum becomes taxable.⁴

Collecting and Filing the Tax

Any business collecting the luxury tax must first register with the state by filing a Business Registration Application (Form NJ-REG) at least 15 business days before the first taxable transaction.⁷

Returns are filed electronically through the New Jersey Division of Taxation’s online portal.⁸ The filing is Form ST-250, the Combined Atlantic City Luxury Tax/State Sales Tax Monthly Return. Gross receipts are broken out by category (room rentals, alcoholic beverages by the drink, admissions, cover and entertainment charges, other taxable transactions) because the rates differ. Returns and payments are due on the 20th of the month following the reporting period. The portal issues an acknowledgment after you authorize payment; keep it as proof of filing.

Records supporting the return must be retained for at least five years after filing, and the Division can request them at any point in that window.⁹ That means daily sales journals, POS reports broken out by tax category, bank deposits, and reconciliations tying reported receipts to actual transactions.

Penalties for Late Filing or Payment

Missing a deadline runs two penalties at once. The late filing penalty is 5% of the unpaid tax per month or partial month the return is overdue, capped at 25%. The Division may also charge $100 for each month the return remains unfiled.¹⁰ If no return is filed within 30 days of the first delinquency notice, the 5% monthly penalty applies to the total tax liability rather than just the underpayment.¹¹

Interest on any unpaid balance accrues at the prime rate plus 3%, which for 2026 is 10%.¹² At year-end, unpaid tax, penalties, and accumulated interest all roll into the principal balance, so a delinquency grows faster than the headline rate suggests.

A separate $50 penalty applies to each return or payment that should have been filed electronically but was not. The Director of the Division of Taxation can waive it for reasonable cause.¹¹

1
Justia. New Jersey Code 40:48-8.15 – Retail Sales Tax in Fourth Class Cities
2
Cornell Law Institute. New Jersey Administrative Code 18:25-1.5 – Tax Rates
3
Justia. New Jersey Code 40:48-8.16 – Retail Sales Tax in Fourth Class Cities
4
New Jersey Department of the Treasury. Atlantic City Luxury Tax, New Jersey Sales Tax and Other Fees
5
New Jersey Department of the Treasury. Atlantic City Luxury Tax
6
New Jersey Division of Taxation. New Jersey Hotel/Motel and State Occupancy Fee Information
7
New Jersey Department of the Treasury. Business Registration Application (NJ-REG)
8
New Jersey Division of Taxation. File Electronically
9
Cornell Law Institute. New Jersey Administrative Code 18:38-7.3 – Record Retention
10
New Jersey Division of Taxation. Penalties, Interest, and Collection Fees
11
Justia. New Jersey Code 54:49-4 – Late Filing
12
New Jersey Department of the Treasury. Interest Rate Assessed on Tax Balances