New Jersey's sales tax rate and what it covers

New Jersey charges a 6.625% sales tax on most goods and services you buy in the state. This is a single statewide rate — it does not change by county or municipality the way property taxes do. When you buy something at a store, the tax is added to the price at checkout.

The tax applies to tangible items: clothing, electronics, furniture, groceries at the register, gasoline, and restaurant meals. It also applies to certain services like dry cleaning, car repairs, and haircuts. The tax goes to the state, not to individual towns, though some of the revenue is returned to municipalities through state funding formulas.

Some items are exempt from sales tax in New Jersey. These include most unprepared food (raw vegetables, meat, dairy, bread), prescription medications, and medical devices like wheelchairs or hearing aids. Clothing and footwear under $110 per item are also exempt — this is one of the few states with a clothing exemption, and the $110 threshold matters if you buy expensive items.

Key Takeaways

  • New Jersey's sales tax rate is 6.625% statewide, applied at the point of sale to most goods and many services.
  • Unprepared food, prescription drugs, and clothing under $110 per item are exempt from sales tax.
  • Restaurant meals, prepared food, and takeout are taxed, even if you eat at home.
  • If you buy something online from a seller with a physical presence in New Jersey, sales tax is charged; out-of-state sellers may or may not collect it depending on their size and structure.
  • Businesses register with the New Jersey Division of Taxation and remit sales tax monthly or quarterly depending on their volume.

What counts as a taxable sale in New Jersey

A taxable sale is any transfer of tangible personal property or taxable service for money. That means if you hand over cash or a card and receive a physical item or a covered service, sales tax applies unless the item or service is specifically exempt.

Prepared food is taxed even if you take it home. A sandwich from a deli counter, coffee from a café, or a rotisserie chicken from a grocery store all have sales tax added. But a loaf of bread, a package of deli meat, or raw chicken you cook yourself do not. The line is whether the seller prepared it for immediate consumption.

Services that are taxed include labor on repairs (a mechanic's time and parts), personal services (haircuts, manicures), and professional services in certain categories (pest control, landscaping). Other services like legal advice, accounting, and medical care are not taxed. The distinction is not always obvious, and businesses sometimes dispute whether their work is taxable.

Items and services that are not taxed

New Jersey's exemptions are narrower than some states but broader than others. Unprepared food — anything you cook at home — is never taxed. This includes raw meat, vegetables, grains, dairy, eggs, and frozen uncooked meals. Prescription medications and over-the-counter drugs are exempt. Medical equipment like canes, crutches, and diabetic supplies are exempt.

Clothing and footwear under $110 per item are exempt. If you buy a $105 shirt, no tax. If you buy a $115 shirt, the full price is taxed. This applies per item, so buying ten $100 shirts means no tax on any of them, but buying one $150 jacket means tax on the whole thing.

Certain other items are exempt: newspapers and magazines, textbooks, and items sold by nonprofit organizations for charitable purposes. Gasoline is taxed, but diesel fuel used for farming is not. The exemptions are specific, and if you are unsure whether something is taxed, the seller's receipt or the Division of Taxation website can tell you.

How online purchases are taxed

If you order something online from a retailer that has a warehouse, office, or other physical location in New Jersey, sales tax is charged at checkout. This is true whether the seller is based in New Jersey or out of state — what matters is whether they have a "nexus" (a physical presence) in the state.

If you order from a small out-of-state seller with no presence in New Jersey, they may not charge sales tax. However, New Jersey law requires you to pay "use tax" — essentially the same rate — on those purchases when you file your state income tax return. Most individual taxpayers do not do this, and enforcement is limited, but the obligation exists.

Large online retailers like Amazon collect sales tax on most items shipped to New Jersey addresses, regardless of where their warehouse is located. This is because federal law now requires large sellers to collect sales tax in states where they have economic activity, not just physical presence. The rules are complex and change as court decisions and state laws evolve.

Who collects and pays sales tax

The business selling the item collects sales tax from you at the point of sale and then remits it to the New Jersey Division of Taxation. Retailers, restaurants, service providers, and online sellers are all required to register for a sales tax account if they do business in New Jersey and meet certain thresholds.

Businesses file sales tax returns monthly or quarterly depending on their volume. A small business might file quarterly; a large retailer files monthly. The Division of Taxation audits businesses to ensure they are collecting and reporting correctly. If a business fails to remit sales tax, the state can pursue the business owner and, in some cases, the person responsible for the business's finances.

You do not file sales tax yourself as a consumer — the business handles it. Your receipt shows the tax amount, and that is your record. If you are a business owner, you need to understand your obligations to register, collect, and remit; the Division of Taxation website has registration forms and instructions.

Sales tax on specific categories

Groceries are mostly exempt, but the line between grocery and prepared food matters. A frozen pizza from the freezer section is not taxed. A pizza from the hot case or a pizza place is taxed. A rotisserie chicken from the deli is taxed. A raw chicken is not. Bakery items vary: a loaf of bread is not taxed, but a cake from the bakery counter often is, because it is considered prepared food.

Gasoline is taxed at the pump. The price you see includes the 6.625% sales tax plus the state gasoline tax (which is separate and higher). Diesel fuel used for farming or commercial purposes may have different tax treatment.

Clothing under $110 per item is not taxed. Shoes, belts, hats, and accessories all follow the same rule. If you buy a pair of shoes for $95, no tax. If you buy a pair for $125, the full amount is taxed. Clothing for animals, like dog sweaters, is taxed because it is not considered clothing for human wear.

Haircuts and salon services are taxed. Gym memberships and fitness classes are not. Dry cleaning is taxed. Laundry services are taxed. The pattern is that personal services involving labor on your property or body are usually taxed, but memberships and recurring services are often not.

How to learn about something is taxable

The New Jersey Division of Taxation publishes a list of taxable and exempt items on its website. You can search by category or item type. If you are unsure, you can also ask the seller at the register — they should know whether their product is taxable.

If you are a business owner and need to know whether you should collect tax on what you sell, the Division of Taxation has a phone line and email for business questions. They can tell you whether your specific service or product is taxable and help you set up your account.

Receipts always show whether tax was charged. If you see a line item for "sales tax" or "tax," that amount was added to your purchase. If you do not see a tax line, the item was exempt or the seller made an error.

Frequently Asked Questions

Is clothing always tax-free in New Jersey?

No. Clothing and footwear are tax-free only if the item costs less than $110. If a single item costs $110 or more, the full price is taxed. Accessories like belts, hats, and scarves follow the same rule. Clothing for animals is always taxed.

Do I pay sales tax on groceries?

Most groceries are not taxed: raw meat, vegetables, dairy, bread, and frozen uncooked meals are all exempt. Prepared food — deli sandwiches, rotisserie chicken, bakery cakes, and anything from a hot case — is taxed. The distinction is whether the store prepared it for immediate consumption.

What about prescription medications?

Prescription medications are not taxed in New Jersey. Over-the-counter drugs like pain relievers and cold medicine are also not taxed. Medical equipment like wheelchairs, canes, and diabetic supplies are exempt. Regular vitamins and supplements are taxed because they are not classified as drugs.

Do I owe tax on items I buy from out-of-state sellers online?

If the seller has no physical presence in New Jersey, they may not charge sales tax. However, New Jersey law requires you to pay use tax on those purchases at the same rate (6.625%) when you file your state income tax return. Most individual taxpayers do not report this, and enforcement is limited.

Why is the sales tax rate 6.625% and not a round number?

The rate is 6.625% because it is composed of a base state rate plus a small additional tax. The exact breakdown depends on when the rates were set and modified over time. It is one of the quirks of state tax law that rates are often not round numbers.