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 across all counties. When you buy something at a store, that percentage is added to the price at checkout.

Not everything is taxed. Groceries, prescription medications, and most clothing items under $110 are exempt from sales tax in New Jersey. Prepared food — anything sold hot or meant to be eaten right away — is taxed. Unprepared food you take home to cook is not.

Services are generally not taxed in New Jersey, though there are exceptions. Haircuts, car repairs, and plumbing work are not subject to sales tax. Telecommunications services, parking, and certain hotel stays do have tax applied.

Key Takeaways

  • New Jersey's statewide sales tax is 6.625%, and it applies to most retail goods and prepared food.
  • Groceries, prescription drugs, and clothing under $110 per item are not taxed.
  • Prepared food and restaurant meals are taxed, but raw ingredients you buy to cook at home are not.
  • Online purchases from out-of-state sellers may or may not have New Jersey sales tax added, depending on whether the seller has a physical presence in the state.

Items that are taxed and items that are not

The line between taxed and tax-free purchases can be confusing because it depends on what the item is and how it is sold. A bottle of soda at a grocery store is taxed. A single serving of soda at a restaurant is taxed. But a gallon of milk at the grocery store is not taxed, even though both are beverages.

Clothing is mostly exempt, but there are limits. A shirt, pair of pants, or jacket under $110 is not taxed. If the same item costs $110 or more, the full purchase price is taxed. Accessories like belts, hats, and gloves are taxed regardless of price. Footwear is taxed unless it is a prosthetic device.

Medical equipment and supplies vary. Prescription medications are never taxed. Over-the-counter medications like aspirin or cold medicine are taxed. Diabetic testing supplies, hearing aids, and wheelchairs are not taxed.

How sales tax works on online and mail orders

When you order something online from a company based in New Jersey, sales tax is added to your bill. When you order from a company based outside New Jersey, whether tax is added depends on whether that company has a physical location, employees, or warehouse in New Jersey. If they do, they must collect New Jersey sales tax. If they do not, they typically do not.

This means you might not see sales tax charged on an online purchase from an out-of-state seller. However, New Jersey residents are technically required to pay "use tax" on those purchases when they file their state income tax return. In practice, most people do not report these purchases, and the state does not pursue individual residents for small amounts.

If you are a business owner buying inventory or supplies online, the rules are different and more strictly enforced. Consult a tax professional or the New Jersey Division of Taxation if you are unsure whether use tax applies to your business purchases.

Who collects the tax and where it goes

The retailer — the store, restaurant, or online seller — collects sales tax from you at the point of sale. They then send that money to the New Jersey Division of Taxation. The state uses sales tax revenue to fund schools, infrastructure, and other public services.

Retailers are required to register with the state and file sales tax returns, usually monthly or quarterly depending on the volume of sales. If a business fails to collect or remit sales tax, the state can impose penalties and interest.

Special sales tax situations in New Jersey

New Jersey has a few situations where sales tax works differently. During the annual tax-free week in August, most clothing and footwear under $110 can be purchased without sales tax for one week. The exact dates change each year, so check the Division of Taxation website in July to confirm.

Certain organizations, including nonprofits and government agencies, can buy items without paying sales tax if they have a resale certificate or tax-exempt status. Schools, hospitals, and charities fall into this category. If you work for one of these organizations, you cannot use their tax-exempt status for personal purchases.

Businesses that buy goods to resell do not pay sales tax on those purchases if they provide a resale certificate to the seller. The tax is collected later when the end customer buys the item.

How to understand your receipt

When you look at a receipt from a New Jersey store, the sales tax should be listed as a separate line item. The subtotal shows the price before tax. The tax amount is calculated at 6.625% of the subtotal (or less if items are exempt). The total is the subtotal plus tax.

If you see a receipt with no tax listed, check whether the items purchased were exempt. If you bought only groceries, prescription medications, or clothing under $110, no tax would be charged. If you bought taxable items and no tax appears, ask the cashier to verify the transaction.

Frequently Asked Questions

Is sales tax the same everywhere in New Jersey?

Yes. The statewide rate is 6.625%, and it applies in every county and municipality. New Jersey does not allow local sales taxes on top of the state rate, unlike some other states.

Do I pay sales tax on a car purchase?

Yes. When you buy a car in New Jersey, sales tax is calculated on the purchase price. The tax is collected at the time of sale, usually by the dealership or private seller. If you trade in a vehicle, the sales tax is typically applied only to the net amount you pay after the trade-in credit.

What happens if a store charges me sales tax on something that should be exempt?

Ask the cashier or manager to correct it on the spot. If the error is not fixed, keep your receipt and contact the store later. For significant overcharges, you can file a complaint with the New Jersey Division of Taxation, though they typically handle business compliance rather than individual refunds.

Do I have to pay sales tax on a gift?

Yes. Sales tax is based on the sale itself, not on whether the item is a gift. The person buying the item pays the tax, regardless of who receives it.

Are there any other exemptions I should know about?

Newspapers and magazines are not taxed. Certain agricultural equipment and seeds used for farming are exempt. Fuel oil used for heating is not taxed. If you think an item might be exempt, ask the retailer or check the Division of Taxation website for a full list.