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 vary by county or municipality the way property taxes do. When you buy something at a store, the cashier adds this percentage to your total at checkout.

The tax applies to tangible items: clothing, electronics, furniture, groceries (with exceptions), and prepared food. It also applies to many services: haircuts, car repairs, dry cleaning, and hotel stays. The rate has been 6.625% since 2006.

Key Takeaways

  • New Jersey's sales tax is 6.625% statewide and applies to most goods and many services at the point of sale.
  • Groceries, prescription medications, and medical equipment are exempt from sales tax in New Jersey.
  • Prepared food and restaurant meals are taxed, but unprepared food you cook at home is not.
  • Online purchases from out-of-state sellers may or may not be taxed depending on whether the seller has a physical presence in New Jersey.
  • You do not pay sales tax on services like medical care, legal advice, or accounting, though you do pay it on repairs and alterations.

What is and is not taxed in New Jersey

The state exempts certain categories entirely. Unprepared food — groceries you take home and cook yourself — is not taxed. This includes raw meat, produce, bread, milk, and eggs. But the moment that food is prepared for immediate consumption, tax applies: a sandwich from a deli counter, a rotisserie chicken, or a coffee from a café all get taxed.

Prescription medications and medical devices (like diabetic test strips or hearing aids) are exempt. Over-the-counter medications like aspirin or cold medicine are also exempt. Vitamins and supplements are taxed because they are not classified as medications.

Services that are not taxed include medical care, dental work, legal services, accounting, and veterinary services. However, if you pay for a repair — fixing a watch, altering a suit, or repairing a computer — that repair labor is taxed. The distinction is whether you are paying for a service or paying for goods that result from a service.

How sales tax works on online and out-of-state purchases

If you order from an online retailer that has a warehouse, office, or other physical presence in New Jersey, you pay New Jersey sales tax. If the seller has no physical presence in the state, whether they charge you tax depends on their own policy and their home state's rules. Many large retailers now charge sales tax on all orders regardless of where they ship from, but smaller sellers may not.

You are technically responsible for paying use tax on untaxed purchases you bring into New Jersey, but this is rarely enforced for individual consumers. Use tax is the same rate as sales tax and exists to prevent people from buying tax-free out of state and bringing goods home. In practice, most people do not report or pay use tax on personal purchases.

Sales tax on specific categories

Clothing and footwear under $110 per item are exempt from sales tax in New Jersey — one of the few states with this threshold. A shirt that costs $95 is not taxed; a coat that costs $150 is taxed on the full amount. This applies to new clothing only, not used items.

Gasoline is taxed at the pump as part of the fuel excise tax, which is separate from sales tax. Hotel stays are taxed at 6.625% plus an additional occupancy tax that varies by municipality (usually 5% to 12% more). Rental cars are taxed at 6.625% plus a separate rental car surcharge.

Alcohol is taxed at the sales tax rate when you buy it at a store, but bars and restaurants add both sales tax and a separate alcohol tax to your bill. Cigarettes and vaping products are taxed at sales tax rate plus an excise tax.

Who collects and where the money goes

The retailer or service provider collects sales tax from you at the point of sale and sends it to the New Jersey Department of the Treasury. Businesses file sales tax returns monthly or quarterly depending on their volume. The state uses this revenue for general operations and specific programs.

If a business fails to collect or remit sales tax, the state can pursue the business for back taxes plus penalties. Consumers are not held responsible if a retailer fails to charge tax — the obligation is on the seller to collect and pay.

Sales tax exemptions for specific groups

Nonprofit organizations registered with the state can buy certain items without paying sales tax if they are used directly in the nonprofit's mission. A food bank buying groceries or a homeless shelter buying bedding may be exempt, but the nonprofit must register for a resale certificate first.

Businesses that buy goods to resell do not pay sales tax on those purchases — they provide the retailer with a resale certificate instead. The tax is collected when the end consumer buys the item. This prevents tax from being charged multiple times as goods move through the supply chain.

Frequently Asked Questions

Do I pay sales tax on clothes in New Jersey?

Clothing and footwear under $110 per item are exempt. A $95 shirt is not taxed. A $150 coat is taxed on the full $150. Used clothing is always taxed. The exemption applies only to new apparel.

Is restaurant food taxed differently than grocery store food?

Yes. Unprepared food you buy at a grocery store and cook at home is not taxed. Food prepared for immediate consumption — a restaurant meal, a deli sandwich, a coffee — is taxed at 6.625%. Takeout and delivery orders are taxed the same way as eating in.

Do I have to pay sales tax on online orders from out-of-state companies?

It depends on whether the seller has a physical presence in New Jersey. If they do, you pay New Jersey tax. If they do not, the seller decides whether to charge tax based on their own policy. Many large retailers charge tax on all orders; smaller sellers may not.

Are prescription drugs taxed in New Jersey?

No. Prescription medications are exempt from sales tax. Over-the-counter medications like pain relievers and cold medicine are also exempt. Vitamins and supplements are taxed because they are not classified as medications.

What is use tax and do I have to pay it?

Use tax is a tax on items you buy out of state and bring into New Jersey. It is the same rate as sales tax and exists to prevent tax avoidance. It is rarely enforced for individual consumers, though technically you are responsible for reporting untaxed purchases.