The New Jersey ST-8 form, formally the Certificate of Exempt Capital Improvement, is a one-page document a property owner signs and hands to a contractor so the contractor does not charge the 6.625% state sales tax on labor for a qualifying construction project.1New Jersey Division of Taxation. Sales and Use Tax – Frequently Asked Questions The owner and contractor each complete part of the form, the owner signs it under penalty of perjury, and the contractor keeps it on file. It is never mailed to the state.
What Counts as a Capital Improvement
A capital improvement is the installation of tangible personal property that increases the capital value of real property or significantly extends its useful life, where the installed item is permanently attached.2New Jersey Department of the Treasury. Sales Tax and Home Improvements Permanence is the test. Work that adds value or years of life to the property qualifies; work that restores the property to its existing working condition does not.
The Division of Taxation lists many examples. Common ones include:
- A new roof, new siding, or new gutters
- A new heating system, central air conditioner, or hot water heater
- New kitchen cabinets, kitchen fixtures, or bathroom fixtures
- A new deck, porch enclosure, or shed with cement footings
- Paving a driveway or installing an underground sprinkler system
- Rewiring the home or adding new electrical outlets
- An in-ground swimming pool, fireplace, or electronic garage door opener
- Storm doors and windows, new door locks, or new awnings
Scope matters more than the label on the work. Replacing a few loose bath tiles is a repair. Retiling the entire bathroom with upgraded materials is a capital improvement. Patching a leaky section of roof is a repair. Tearing off the old roof and installing a new one is a capital improvement.2New Jersey Department of the Treasury. Sales Tax and Home Improvements
Projects That Don’t Qualify
Some work is taxable even when it would otherwise meet the capital improvement definition. New Jersey statute specifically excludes landscaping services, carpeting and other flooring installation, and sign installation from the exemption.3Justia Law. New Jersey Revised Statutes 54:32B-3 – Taxes Imposed The administrative code adds alarm system installation.4Cornell Law Institute. New Jersey Administrative Code 18:24-5.7 Planting trees, sodding a lawn, installing wall-to-wall carpet, or wiring a hardwired security system all carry sales tax on the labor, and an ST-8 cannot be used.2New Jersey Department of the Treasury. Sales Tax and Home Improvements
Ordinary repairs and maintenance are also taxable. Fixing faulty plumbing, repairing gutters, pointing bricks, patching driveway potholes, and fixing leaky roofs are all repairs, not capital improvements.2New Jersey Department of the Treasury. Sales Tax and Home Improvements The contractor charges 6.625% on the labor for those jobs.
Filling Out the Form
The ST-8 is a single-page PDF on the Division of Taxation’s sales tax forms page.5New Jersey Division of Taxation. Sales and Use Tax Forms and Certificates Both parties complete parts of it.
Contractor Information
The top section captures the contractor’s full business name, street address, and New Jersey Certificate of Authority number, which is the credential the Division of Taxation issues to businesses authorized to collect sales tax.6New Jersey Division of Taxation. Sales Tax Form ST-8 – Certificate of Exempt Capital Improvement7New Jersey Division of Taxation. Information For Vendors
Property Owner and Project Description
The next section asks for the property owner’s full name and street address, along with the address where the work will be performed, which may differ from the owner’s home address if the job is on a rental or second property.6New Jersey Division of Taxation. Sales Tax Form ST-8 – Certificate of Exempt Capital Improvement
Be specific in the project description. Write “installation of a new central air conditioning system” or “construction of a brick patio with concrete footings” rather than something vague like “home improvement.” The description is what ties the work to the legal standard for a capital improvement, and a thin entry gives an auditor room to question the exemption later.
Signature
The property owner signs and dates the bottom. The signature line carries a perjury and false-swearing affirmation, meaning the owner is certifying under oath that the described work qualifies as a capital improvement.6New Jersey Division of Taxation. Sales Tax Form ST-8 – Certificate of Exempt Capital Improvement If the work turns out to be a repair or falls into an excluded category, the owner is on the hook for the misrepresentation.
How Sales Tax Applies to Materials and Labor
The ST-8 exemption applies to the charge for labor and services, not to construction materials. In New Jersey, the contractor is treated as the final consumer of materials used on any construction job, capital improvement or not, and pays sales tax when buying them from the supplier.8New Jersey Department of the Treasury. Contractors and New Jersey Taxes The contractor cannot use the ST-8 or a resale certificate to buy materials tax-free.
When a project is an exempt capital improvement, the contractor does not charge sales tax on the customer’s bill at all, whether the invoice is itemized or a lump sum.8New Jersey Department of the Treasury. Contractors and New Jersey Taxes For taxable jobs like repairs, maintenance, or the excluded categories, the rules shift. If materials and labor are separately itemized, sales tax applies only to the labor portion. If the bill is a lump sum with no breakdown, tax applies to the entire amount.2New Jersey Department of the Treasury. Sales Tax and Home Improvements
If you buy materials yourself from a retail store, you pay sales tax at the register regardless of whether the project is a capital improvement.4Cornell Law Institute. New Jersey Administrative Code 18:24-5.7 The exemption covers the service charge only.
Who Keeps the Form and for How Long
The form states it directly: do not send it to the Division of Taxation.6New Jersey Division of Taxation. Sales Tax Form ST-8 – Certificate of Exempt Capital Improvement Once signed, the property owner hands the ST-8 to the contractor, who retains it as proof that skipping sales tax was backed by a valid certificate.4Cornell Law Institute. New Jersey Administrative Code 18:24-5.7
New Jersey’s administrative code requires sellers to keep exemption certificates for at least four years from the date of the last transaction covered by the certificate.9Cornell Law Institute. New Jersey Administrative Code 18:24-10.5 – Exemption Certificates; Conditions, Retention, and Inspection If the Division audits the contractor and the ST-8 cannot be produced, the contractor can be held liable for the uncollected sales tax plus interest. Keep your own copy as well; it documents the tax-exempt nature of the improvement, which can matter at resale or during an appraisal.
Penalties for a Bad Certificate
Because the property owner signs under penalty of perjury, issuing an ST-8 for work that clearly does not qualify is not a harmless mistake. If the Division determines a claimed exemption was fraudulent, the civil fraud penalty is 50% of the assessed tax.10Cornell Law Institute. New Jersey Administrative Code 18:2-2.9 – Part of Assessment Due to Civil Fraud Contractors face exposure too. Accepting an obviously invalid ST-8, such as one describing routine plumbing repairs, does not shield the contractor from liability for the uncollected tax.
When a job blends exempt and taxable work, the cleanest approach is a separately itemized invoice. A kitchen renovation might include new cabinets and fixtures (exempt) alongside repairs to existing plumbing (taxable). The ST-8 covers only the capital improvement portion, and the contractor charges sales tax on the labor for the repair portion. Clean paperwork protects both sides if the state comes looking.