New Jersey Sales Tax: The Basics

New Jersey sales tax is a 6.625% tax added to most purchases of goods and some services. When you buy something at a store, restaurant, or online retailer in New Jersey, that percentage is calculated on the sale price and added to your bill at checkout. The tax rate is uniform statewide — it does not vary by county or municipality, though some local taxes may apply on top in specific situations.

The state collects this tax from businesses, which then send it to the New Jersey Division of Taxation. Businesses are responsible for charging the correct amount, keeping records, and filing returns. As a buyer, you see the tax on your receipt, but you do not file anything yourself — the business handles the paperwork.

Key Takeaways

  • New Jersey sales tax is 6.625% on most goods and applies at the point of sale, added to your total bill.
  • Groceries, prescription medications, and clothing under $110 per item are exempt from sales tax in New Jersey.
  • Restaurants and prepared foods 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.

What Is and Is Not Taxed in New Jersey

Not everything you buy is subject to the 6.625% rate. Groceries — unprepared food you take home to cook — are not taxed. This includes bread, milk, vegetables, meat, and canned goods. However, prepared foods, hot foods, and anything you eat at a restaurant or food counter are taxed. A sandwich from a deli counter is taxed; a loaf of bread from the shelf is not.

Prescription medications and medical devices are also exempt. Over-the-counter medicines like aspirin or cold medicine are taxed, but prescription drugs filled by a pharmacist are not. Clothing and footwear under $110 per item are exempt; items over that threshold are taxed on the full amount. A $100 pair of shoes is tax-free; a $150 pair is taxed.

Services are generally not taxed in New Jersey, with some exceptions. Haircuts, car repairs, and plumbing work are not taxed. However, certain services tied to goods — like installation, delivery, or alterations — may be taxed depending on how the business structures the charge. If you are unsure whether a specific service is taxed, ask the business before you pay.

How Sales Tax Appears on Your Receipt

When you check out, the cashier or online system calculates the tax based on the taxable items in your purchase. The tax amount is shown separately on your receipt, below the subtotal. For example, if you buy $50 in taxable goods, the tax is $3.31 (50 × 0.06625), and your total is $53.31.

If you buy a mix of taxable and tax-exempt items — say, groceries and a magazine — only the magazine is taxed. The receipt should show which items were taxed and which were not, though the format varies by store. If you notice an error, ask the cashier to recalculate before you leave.

Sales Tax on Online and Out-of-State Purchases

Online shopping from New Jersey-based retailers or retailers with a physical location in New Jersey is subject to sales tax. Amazon, for example, collects New Jersey sales tax on most items shipped to a New Jersey address because the company has warehouses and offices in the state.

Purchases from out-of-state retailers depend on whether that retailer has what the law calls a "nexus" — a physical presence, employees, or significant sales activity — in New Jersey. Large national retailers typically do and will charge you tax. Smaller out-of-state sellers may not, and you will not see tax added. This is a gap in how the tax system works, and it means some online purchases are not taxed even though they should be.

Who Collects and Pays Sales Tax

The business selling you the item is responsible for collecting sales tax and sending it to the state. You do not file a form or send money to the Division of Taxation yourself. The business keeps records of all taxable sales, files a return (usually monthly or quarterly), and pays the state the total tax collected.

Businesses must register with the New Jersey Division of Taxation and obtain a sales tax permit before they can legally operate. If a business fails to collect or pay sales tax, the state can audit them, impose penalties, and require them to pay back taxes. As a customer, you are not liable for the business's failure to collect tax — that is between the business and the state.

Local Option Sales Tax and Special Cases

In addition to the state rate of 6.625%, some New Jersey municipalities have added a local option sales tax of 0.5% or 1%. This means the total rate in those areas is 7.125% or 7.625%. The local tax applies to the same items as the state tax and appears on your receipt as part of the total. You can check your local rate by looking at a recent receipt or calling your municipal tax assessor's office.

Certain items and situations have special rules. Utilities (electricity, gas, water) are taxed at a lower rate of 4%. Cigarettes and tobacco products are taxed at the regular rate plus an excise tax. Gasoline is not subject to sales tax but is subject to a separate motor fuels tax. If you are buying for a business or a tax-exempt organization, different rules may apply, and you may need to provide a resale certificate or tax-exempt certificate.

Frequently Asked Questions

Why is sales tax added at checkout instead of being included in the price?

New Jersey law requires businesses to show the tax separately on the receipt so you can see exactly how much tax you are paying. The price on the shelf or online listing is the pre-tax price; tax is calculated and added at the register. This is standard across most U.S. states.

Do I have to pay sales tax if I buy something online from a New Jersey store?

Yes, if the retailer has a physical presence in New Jersey or is based in New Jersey, they must charge you sales tax on your order. This applies whether you pick it up in the store or have it shipped to your home.

Is clothing always tax-free in New Jersey?

Clothing and footwear under $110 per item are tax-free. Items priced at $110 or more are taxed on the full amount. A $109 shirt is not taxed; a $110 shirt is taxed. The threshold applies per item, not per purchase.

What if a receipt shows the wrong tax amount?

Point it out to the cashier or store manager immediately. They can recalculate and issue a refund for the overcharge. Keep your receipt. If you notice an error after you leave, contact the store with your receipt and the date of purchase.

Do I owe sales tax on items I buy out of state and bring into New Jersey?

Technically, New Jersey law requires you to pay a "use tax" equal to the sales tax on items you buy out of state and use in New Jersey if no sales tax was charged. In practice, this is rarely enforced for individual purchases. Businesses, however, are expected to track and report use tax on business purchases.