New Jersey sales tax is 6.625% statewide, applied to most retail sales of tangible goods, specified digital products, and a defined list of services. The rate has been 6.625% since January 1, 2018.1Justia. New Jersey Code 54:32B-3 – Taxes Imposed There are no county or municipal add-ons, so the register in Newark rings up the same tax as the register in Cape May. Two narrow geographic programs charge half that rate, and several large categories of everyday spending are exempt entirely.
What Gets Taxed at 6.625%
The base is broad. Tangible personal property is taxable by default, and so are specified digital products and a list of enumerated services.2New Jersey Division of Taxation. Sales and Use Tax Taxable services include telecommunications, landscaping, storage, and installation or repair of personal property. Capital improvements to real property are generally not taxed, but installing carpet, other flooring, and signs are statutory exceptions that remain taxable.1Justia. New Jersey Code 54:32B-3 – Taxes Imposed
On the digital side, the 6.625% rate covers digital audio-visual works (streamed or downloaded movies and TV), digital audio works (music, podcasts, ringtones), and digital books. An access code that lets you download any of these is treated the same as the product.3New Jersey Department of the Treasury. ANJ-27 Specified Digital Products and New Jersey Sales Tax Prewritten computer software is taxable whether delivered on a disc or downloaded.4New Jersey Legislature. P.L. 2006, Chapter 44
What’s Exempt: Clothing, Groceries, and Medical
Three big categories of everyday spending come off the tax base entirely.
Clothing and Footwear
Most clothing and shoes for everyday wear are tax-free. Jeans, a winter coat, dress shoes — all exempt. The exclusions are specific: fur clothing where fur is the dominant material by value, accessories like handbags and jewelry, sport or recreational equipment like ski boots, and protective gear like hard hats are all taxable.5Justia. New Jersey Code 54:32B-8.4 – Clothing, Footwear, Exemption From Tax, Definitions The practical line the statute draws: everyday apparel is exempt, specialized or decorative items are not.
Groceries
Food and food ingredients bought for home consumption are exempt. Prepared food is the exception and is fully taxable at 6.625%, so a bag of rice from the grocery aisle is tax-free, but a hot meal from the deli counter or a restaurant is taxed.6New Jersey Department of the Treasury, Division of Taxation. Sales of Prepared Food by Food Service Providers (TB-71)
Medical Supplies and Drugs
Prescription drugs, over-the-counter medications, diabetic supplies, prosthetic devices, durable medical equipment for home use, and mobility-enhancing equipment sold by prescription are all exempt. So are tampons, medical oxygen, and human blood products.7Justia. New Jersey Code 54:32B-8.1 – Exemption for Certain Medical Supplies, Equipment, Definitions
Reduced Rate: Urban Enterprise Zones and Salem County
Certified businesses in New Jersey’s Urban Enterprise Zones charge half the standard rate — 3.3125% — on most tangible goods. UEZ-qualified businesses can also buy most items and services for their own use tax-free, with motor vehicles, energy, telecommunications, and utility services excluded.8NJ Division of Taxation. Urban Enterprise Zone Authorized Salem County sellers collect at the same 3.3125% rate on qualifying sales.9New Jersey Division of Taxation. Urban Enterprise Zone/Salem County Businesses Prepared food, meals, and beverages do not qualify for the reduced rate under either program and stay at 6.625%.
Use Tax on Out-of-State Purchases
If you buy a taxable item from an out-of-state seller who doesn’t collect New Jersey tax, you owe use tax at the same 6.625%. This covers online orders, catalog purchases, and items you buy while traveling and bring home.10Division of Taxation. Use Tax FAQ
If you paid sales tax to another state at a lower rate, you owe New Jersey the difference. Pay 4% to another state on a $1,000 item and you owe New Jersey $26.25 — the gap between $66.25 at 6.625% and the $40 already paid. Individuals can report use tax on the New Jersey resident income tax return (Form NJ-1040) or file it separately on Form ST-18 any time during the year.10Division of Taxation. Use Tax FAQ
Registering a Business to Collect Sales Tax
Any business making taxable sales in New Jersey must register with the Division of Revenue and Enterprise Services before collecting a dollar of tax. Registration runs through Form NJ-REG, the state’s Business Registration Application, submitted online.11New Jersey Division of Taxation. Starting a Business in New Jersey Corporations, LLCs, and limited partnerships register using their EIN and New Jersey Business Entity ID; sole proprietors and partnerships can use an SSN or EIN.12State of New Jersey Online Tax/Employer Registration. Business and Employer Registration You’ll also need an eight-digit NAICS code classifying your industry.13Business.NJ.gov. Register Your Business Once approved, the state issues a Business Registration Certificate.14State of New Jersey. Division of Revenue and Enterprise Services – Getting Registered
Accepting Resale and Exempt Use Certificates
Not every sale requires tax collection. When a buyer has a valid exemption, they hand the seller a certificate, and the responsibility for proving the exemption shifts to the buyer.
Form ST-3 is the resale certificate. A business buying inventory for resale uses it to purchase tax-free, provided the buyer holds a valid Certificate of Authority to collect New Jersey sales tax. Sellers who accept a fully completed ST-3 within 90 days of the sale are relieved of liability for uncollected tax on the transaction, and the certificate must be kept on file for four years from the last covered sale.15New Jersey Division of Taxation. Sales Tax Resale Certificate
Form ST-4 covers purchases where the item will be put to a use the Sales and Use Tax Act specifically exempts: manufacturing machinery and equipment, research and development materials, wrapping supplies for product delivery, and newspaper or commercial printing equipment are common examples. The same 90-day and four-year rules apply. If a seller is audited without a valid certificate on file, the Division allows at least 120 days to obtain one from the buyer or produce other evidence that the sale was exempt. Without that documentation, the seller owes the tax.16New Jersey Division of Taxation. ST-4 Exempt Use Certificate
Filing Returns and Making Payments
Every registered business files a quarterly return on Form ST-50. The deadlines are the 20th of the month after each quarter closes:17Division of Taxation. Filing and Remitting Sales and Use Tax
- January through March — April 20
- April through June — July 20
- July through September — October 20
- October through December — January 20
Returns and payments are due by 11:59 p.m. on the due date; when the 20th falls on a weekend or holiday, the deadline moves to the next business day.
Larger businesses also owe monthly payments. If you collected more than $30,000 in sales and use tax during the prior calendar year and collected more than $500 in either the first or second month of the current quarter, you must make a monthly payment on top of the quarterly return. Both conditions must be met; crossing $30,000 annually alone does not trigger the monthly obligation if your monthly collections stay at $500 or below.17Division of Taxation. Filing and Remitting Sales and Use Tax
All payments must be electronic — e-check, EFT, or credit card. Credit card payments carry a separate convenience fee.17Division of Taxation. Filing and Remitting Sales and Use Tax Sales slips, invoices, receipts, cash register tapes, and purchase records must be kept available for inspection by the Division of Taxation and preserved for four years from the filing date of the covered quarterly period.18Legal Information Institute. New Jersey Administrative Code 18:24-2.3 – General Requirements
Penalties for Filing Late
A late return triggers a $100 penalty for each month (or part of a month) the return is delinquent, plus a 5% monthly penalty on the unpaid tax balance, capped at 25%. If the return is still unfiled 30 days after the Division’s first delinquency notice, that 5% monthly penalty applies to the total tax liability rather than just the underpayment. Interest also accrues on any unpaid balance each month it stays outstanding. Filing on time with a partial payment costs far less than filing late, even if you can’t cover the full amount.
Remote Sellers Shipping Into New Jersey
Out-of-state businesses must register and collect New Jersey sales tax once they cross either of two thresholds in the current or prior calendar year: more than $100,000 in gross revenue from sales delivered into the state, or 200 or more separate transactions delivered into the state. Hitting either one triggers the obligation.19State of New Jersey. Remote Sellers The rule has been in place since November 2018.
Buying a Business: the Bulk Sale Rule
If you’re buying an existing New Jersey business or its assets, the bulk sale notification is the step most buyers underestimate. Skip it, and you can be stuck with the seller’s unpaid tax debts.
The buyer (or buyer’s attorney) must notify the Division of Taxation at least 10 business days before closing by filing Form C-9600. The notification needs valid NJ tax IDs for both parties, the closing date, mailing addresses, signatures, and a copy of the executed contract showing price and terms. There’s no filing fee, but it must go by certified mail, registered mail, or express delivery. Hand delivery and fax don’t count.20NJ Division of Taxation. Bulk Sales Frequently Asked Questions
Within 10 business days of receiving a complete notification, the Division responds in one of a few ways: a clearance letter saying no escrow is required, an escrow letter specifying how much the buyer must hold back from the purchase price until the seller’s tax obligations are resolved, or a returns-required letter directing the seller to file outstanding returns. Close the deal without proper notification, or before the 10-day waiting period runs, and you assume the seller’s tax obligations. The NJ Tax Court has held that this liability can even exceed the purchase price of the business assets.20NJ Division of Taxation. Bulk Sales Frequently Asked Questions