New Jersey sales tax is a flat 6.625% charged statewide on most tangible goods, many services, and certain digital products. The rate is the same in every city and county because New Jersey does not let local governments add their own surcharge. Groceries, clothing, and prescription drugs are the biggest exemptions, which keeps most everyday essentials tax-free.
One Rate Across the State
The 6.625% rate applies in every county and municipality in New Jersey.1State of NJ – Department of the Treasury – Division of Taxation. Rates and Boundaries What you pay at the register in Newark is what you pay in Cape May. On a $100 taxable purchase, the tax comes to $6.63, for a total of $106.63.
The Urban Enterprise Zone Half-Rate
The one geographic wrinkle is Urban Enterprise Zones. These are designated areas in certain New Jersey cities set up to encourage activity in underserved communities. Qualified businesses inside a UEZ can charge just 3.3125%, exactly half the standard rate, on most in-person purchases of tangible goods.2NJ Division of Taxation. UEZ Requirements
The sale has to originate and be completed in person at the business’s location inside the zone. Phone or online orders from a UEZ business do not qualify. Motor vehicles, alcoholic beverages, and cigarettes are excluded from the discount even when purchased in person inside a zone.
What Gets Taxed
The tax reaches three broad categories: physical goods, certain services, and specified digital products.3NJ Division of Taxation. Sales and Use Tax
Physical Goods
Most retail items are taxable unless a specific exemption applies. Electronics, furniture, appliances, sporting goods, cosmetics, and household items all carry the 6.625% rate. If you’re unsure about a particular item, the safe assumption is that it’s taxable. Exemptions are carved out by statute, and everything else falls in.
Services
New Jersey taxes a wider range of services than many people expect.4New Jersey Division of Taxation. New Jersey Sales Tax Guide – Tax Topic Bulletin S&U-4 Common taxable services include:
- Auto and appliance repair, including both labor and parts
- Telecommunications, including landline, wireless, and paging
- Parking, garaging, and boat storage
- Cleaning and janitorial services
- Landscaping and lawn maintenance
- Alarm monitoring
- Catering
- Car washing
- Information services such as credit reports and investigative services
Exempt services include haircuts, beauty treatments, child care, architectural work, advertising, and most professional services like accounting and legal counsel.
Digital Products
New Jersey taxes “specified digital products” when they are electronically delivered to a New Jersey address, including downloaded music, movies, TV shows, and e-books.5NJ.gov. ANJ-27 Specified Digital Products and New Jersey Sales Tax A New Jersey billing address makes the download taxable even if you’re traveling out of state when you buy it.
Streaming works differently. Video programming services, including video-on-demand and broadcast content, fall outside the definition of specified digital products and are generally not taxable.5NJ.gov. ANJ-27 Specified Digital Products and New Jersey Sales Tax Cable and satellite television subscriptions are also exempt.4New Jersey Division of Taxation. New Jersey Sales Tax Guide – Tax Topic Bulletin S&U-4
Cloud-based software subscriptions are usually not taxable. New Jersey treats SaaS as a service rather than tangible personal property because the customer accesses the software remotely rather than receiving a delivered copy.6NJ.gov. Cloud Computing (SaaS, PaaS, IaaS) The exception is SaaS that qualifies as an information service, meaning it collects, compiles, or analyzes data and delivers it to customers. That kind of SaaS is taxable.
Major Exemptions
Groceries and Food
Most food and drink bought at a grocery store, supermarket, or bakery for home consumption is exempt.4New Jersey Division of Taxation. New Jersey Sales Tax Guide – Tax Topic Bulletin S&U-4 Bread, canned goods, dairy, produce, and meat all qualify.
Three food categories are always taxable: candy (a preparation of sugar or sweeteners combined with chocolate, fruit, nuts, or flavorings in bar, drop, or piece form), soft drinks (any sweetened nonalcoholic liquid), and prepared food. Restaurant meals and catered food fall into the prepared-food category and carry the full 6.625%.
Clothing and Footwear
Clothing and shoes for everyday human wear are exempt.4New Jersey Division of Taxation. New Jersey Sales Tax Guide – Tax Topic Bulletin S&U-4 The exemption does not cover fur clothing, accessories like jewelry, handbags, and tote bags, or sport and recreational equipment. Protective gear is taxable unless it’s necessary for the wearer’s daily work.
Medications and Medical Equipment
Prescription drugs are exempt. So are over-the-counter medications that carry a “Drug Facts” label or a statement of active ingredients.4New Jersey Division of Taxation. New Jersey Sales Tax Guide – Tax Topic Bulletin S&U-4 Diabetic supplies, prosthetic devices, and durable medical equipment intended for home use are exempt. Items like wheelchairs and crutches are exempt when sold with a doctor’s prescription.
Buying a Vehicle
Motor vehicles carry the full 6.625% whether new or used, and the UEZ half-rate never applies.7NJ Division of Taxation. Motor Vehicle Casual Sales Frequently Asked Questions
Trading in a vehicle at a dealership reduces the taxable amount. Sales tax is calculated on the purchase price minus the trade-in credit, but only when the trade-in happens at a registered dealership taking the vehicle for resale, and the trade-in contract is executed at the same time as the purchase.8NJ.gov. New Jersey Tax Guide – Motor Vehicle Purchases/Leases
Private sales between individuals work differently. The buyer pays sales tax directly to the New Jersey Motor Vehicle Commission when transferring title and registering the vehicle.7NJ Division of Taxation. Motor Vehicle Casual Sales Frequently Asked Questions Bartering counts as a purchase, too. Swap a boat for a car or trade vehicles with a friend and you owe sales tax on the fair market value of what you receive.
Use Tax on Out-of-State Purchases
Here’s the part that catches people off guard. If you buy a taxable item from an out-of-state seller that does not collect New Jersey sales tax, you owe “use tax” at the same 6.625% rate.9NJ.gov. ANJ-7 New Jersey Use Tax The purpose is to close a loophole where residents could avoid state tax by shopping across the border or from out-of-state sellers.
If the other state collected some sales tax at a lower rate, you owe the difference. Individuals can report and pay use tax either on Form ST-18, due within 20 days of bringing the property into New Jersey, or on their annual New Jersey income tax return using Form NJ-1040.9NJ.gov. ANJ-7 New Jersey Use Tax
Online Marketplaces and Remote Sellers
In practice, most large online retailers now collect New Jersey sales tax at checkout. Since November 2018, out-of-state sellers meeting certain thresholds have had to register with New Jersey and collect the tax on deliveries into the state. A remote seller crosses that line by either earning more than $100,000 in gross revenue from New Jersey sales or completing 200 or more separate transactions delivered into New Jersey during the current or prior calendar year.10NJ Division of Taxation. New Jersey Sales Tax Remote Sellers Frequently Asked Questions
Marketplace facilitators like Amazon, eBay, and Etsy have a separate obligation. New Jersey requires any marketplace facilitator to collect and remit sales tax on sales made through its platform, even if the third-party seller is also registered to collect New Jersey tax.11NJ.gov. TB-83 – Sales Through a Marketplace Buy from a small vendor through Amazon and Amazon handles the tax. The result for most shoppers is that use tax now mostly comes up on purchases from smaller sellers, international sellers, or anyone who slips through the collection net.