New Jersey's sales tax rate and what it covers

New Jersey charges a 6.625% sales tax on most retail purchases. This is the statewide rate that applies when you buy tangible goods — clothing, electronics, furniture, groceries at the register. The tax is calculated on the sale price and added at checkout.

Some items are taxed at a lower rate or not taxed at all. Clothing and footwear under $110 per item are tax-free. Groceries you take home to cook — milk, bread, vegetables, meat — are not taxed. Prescription medications are not taxed. But prepared food, restaurant meals, and food bought hot are taxed at the full rate.

Services are generally not subject to sales tax in New Jersey, even though they are in some states. If you hire a plumber, pay for a haircut, or buy car repair work, there is no sales tax. The tax applies to things you can touch and take with you, not to work someone does for you.

Key Takeaways

  • New Jersey's statewide sales tax is 6.625%, added to most retail purchases at the register.
  • Clothing and footwear under $110 per item, unprepared groceries, and prescription medications are not taxed.
  • Some counties add a local tax on top of the state rate, raising the total to between 6.625% and 7.625%.
  • Services like repairs, haircuts, and professional work are not subject to sales tax in New Jersey.
  • Businesses that sell taxable goods must register with the New Jersey Division of Taxation and file returns monthly or quarterly.

Local sales tax additions by county

Fifteen of New Jersey's twenty-one counties add a local sales tax on top of the state rate. This local portion ranges from 0.5% to 1%, depending on where you live. The combined rate you pay at checkout is the state 6.625% plus your county's local rate.

Bergen, Essex, Hudson, Passaic, and Union counties each add 1%, bringing the total to 7.625%. Morris, Middlesex, Monmouth, Ocean, and Westchester counties add 0.625%, for a total of 7.25%. Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Hunterdon, Mercer, Morris, Salem, Somerset, Sussex, and Warren counties add 0.5%, for a total of 7.125%. Six counties — Hunterdon, Morris, Salem, Somerset, Sussex, and Warren — have no local addition and stay at 6.625%.

The local tax is collected by the retailer at the same time as the state tax. You do not pay it separately. When you see a price tag, the total at checkout will include both portions.

What triggers sales tax and what does not

The rule is straightforward: tangible personal property is taxed; services and intangibles are not. A shirt is taxed. Tailoring the shirt is not. A book is taxed. A library membership is not. A phone is taxed. A phone plan is not.

Digital goods fall into a gray area. Software you download, e-books, and streaming subscriptions are generally not taxed in New Jersey, though this can vary by product type. If you are unsure whether a specific purchase is taxed, the retailer's receipt will show the tax amount, or you can contact the New Jersey Division of Taxation.

Items bought for resale — inventory a business purchases to sell to customers — are not taxed if the buyer has a resale certificate. A clothing store does not pay sales tax when it buys stock from a wholesaler. But once that clothing is sold to a consumer, the consumer pays tax.

How businesses register and file sales tax

Any business that sells taxable goods in New Jersey must register with the New Jersey Division of Taxation before opening. Registration is free and done online through the state's business portal. The business receives a sales tax permit, which must be displayed at the point of sale.

Once registered, the business collects sales tax from customers and files a return with the state. Most businesses file monthly; some file quarterly if their sales are very small. The return shows total sales, taxable sales, tax collected, and tax owed to the state. Businesses keep the difference between tax collected and tax owed only if they have made an error — the tax collected belongs to the state.

Businesses must keep records of all sales for at least four years. These records are used if the Division of Taxation audits the business to verify that the correct amount of tax was collected and reported.

Tax-exempt purchases and who qualifies

Certain organizations and purchases are exempt from sales tax. Nonprofits with a 501(c)(3) status can buy goods tax-free if they have an exemption certificate from the state. Schools, hospitals, and government agencies also have exemption status. A nonprofit cannot simply claim exemption — it must apply to the Division of Taxation and receive a certificate.

Individuals do not have a blanket exemption, but specific items are always tax-free: prescription drugs, medical devices prescribed by a doctor, and items for people with disabilities (like wheelchairs or hearing aids) if the buyer has documentation. Clothing under $110 is tax-free for everyone, regardless of income or status.

Resale certificates allow businesses to buy inventory without paying tax. The business provides the certificate to the wholesaler, proving the goods will be resold. The wholesaler does not collect tax; the tax is paid later when the item is sold to the consumer.

How sales tax differs from income tax

Sales tax and income tax are separate. Income tax is paid on wages and earnings; sales tax is paid on purchases. New Jersey has both. You pay income tax to the state based on what you earn. You pay sales tax to the state (and sometimes your county) based on what you buy.

A person earning $50,000 a year pays New Jersey income tax on that $50,000. If that person spends $10,000 on taxable goods during the year, they also pay sales tax on that $10,000. The two taxes do not offset each other. Both are owed.

Businesses also pay both. A business pays income tax (or corporate tax) on its profit. It also collects and remits sales tax on its sales. The sales tax collected is not the business's income — it is money held in trust for the state.

Frequently Asked Questions

Do I pay sales tax on online purchases from out-of-state retailers?

Yes, if the retailer ships to New Jersey, you owe sales tax at New Jersey's rate. Large online retailers like Amazon collect and remit this tax automatically. Smaller retailers may not, in which case New Jersey residents are technically responsible for paying "use tax" — a tax on purchases made outside the state but used in New Jersey. In practice, use tax is rarely enforced for individual purchases.

Why is clothing under $110 tax-free but clothing over $110 is taxed?

New Jersey exempts clothing and footwear to reduce the tax burden on basic necessities. The $110 threshold was set by state law and applies per item. A $105 shirt is tax-free; a $115 shirt is taxed. If you buy five $100 shirts, none are taxed. The limit is per piece, not per transaction.

Can I get a refund of sales tax I already paid?

No, sales tax is final once paid. If you return an item, the retailer refunds the purchase price including the tax. If you overpaid due to a retailer's error, you can ask the retailer for a refund. Disputes about whether an item should have been taxed can be reported to the Division of Taxation, but the individual consumer does not file a claim for a refund.

What happens if a business does not collect or report sales tax?

The Division of Taxation can audit a business and assess back taxes, penalties, and interest. Penalties for underreporting can be 10% to 50% of the unpaid tax, depending on whether the error was negligent or intentional. Businesses that fail to register or file returns face additional penalties and possible criminal charges in cases of fraud.

Is there sales tax on used items sold between individuals?

No. If you sell your used car, furniture, or clothing to another person directly, there is no sales tax. Sales tax applies only to sales by retailers and businesses. Private sales between individuals are not taxed. However, if you sell through a dealer or consignment shop, the dealer may charge sales tax on the transaction.