Sales and Use Tax in New Jersey
New Jersey first adopted a general sales tax in 1935, at 2%, and gradually increased it afterward. On July 16, 2006, New Jersey increased sales and use tax from 6% to 7% on all retail sales of goods and services. Later on, the sales and use tax was reduced in phases between 2017 and 2018. The sales tax was 6.875% on sales made between January 1, 2017, and December 31, 2021. It was further adjusted to the current 6.625% on sales made on and after January 1, 2018. New Jersey does not allow the application of local sales taxes. However, there are special luxury or tourism sales taxes. In Established Urban Enterprise Zones, businesses with a UZ-2 certificate may charge a 3.3125% sales tax, which is half the regular sales tax, on certain sales.
How to Charge and Pay the Sales Tax in New Jersey
Sales and Use Tax in New Jersey
The sales tax in New Jersey is destination-based. Sellers are required to pay a sales tax irrespective of their location when they sell to buyers in New Jersey. The sales tax becomes a use tax if a New Jersey resident buys goods via mail, out of state, or online and ships them to New Jersey for use.
Registering for Sales Tax and Use Tax
Sellers in New Jersey must register with the New Jersey Department of Revenue and Enterprise Services for them to collect and remit sales and use tax, as well as issue and receive exemption certificates. If your business does not have a tax liability in New Jersey, you will receive a letter advising you on the same. Registered sellers receive a New Jersey Certificate of Authority for sales tax, which they must display at their place of business.
Sales tax exempt items include most food sold as grocery items, clothes, footwear, disposable paper products for household use, prescription drugs, and over-the-counter drugs. Other exempt goods are manufacturing machinery or equipment and goods bought for resale. Hotel occupancy sales tax is at 5%, but occupancies that exceed 90 days are exempt. Tax-exempt buyers include government agencies and some nonprofit organizations. UEZ businesses are also exempt from paying taxes on certain goods and services meant for their businesses. The NJ Division of Revenue gives UEZ businesses UZ-4 and UZ-5 certificates to enable them to buy certain goods and services for their business’s use. The uses can include repairs, alterations, or improvements to their business premises. The goods can also be for office use, such as furnishings, business suppliers, and equipment, as well as furnishings.
Filing and remittance
If the sales or use tax is less than $500 in the current month, or even when no tax is due, or sales made, the seller must file their taxes quarterly. To do that, they must use ST-50. The due date for filing and paying taxes quarterly is on the 20th of the month, following the end of the previous quarter. If the sales tax due is $500 or more in the current month, then the seller must file and pay their taxes monthly. The due date for filing and paying a sales or use tax monthly is the 20th of the month following the month whose tax is due.
Other useful articles:
- Sales Tax by State in the United States
- How to Verify Tax Exempt Certificate
- Verify Tax Exempt Resale Certificate by State
- What is a Tax Exempt Status
- VAT Taxes in Europe
- Sales Tax Thresholds by State
- Sales Tax in California
- Sales Tax in Florida
- Sales and Use Tax in New York
- Texas Sales and Use Tax and Filing Dates
- Virginia Sales and Use Tax
- Illinois Sales and Use Tax and Filing Frequency
- Ohio Sales and Use Tax and When to File
- Sales and Use Tax in New Jersey