Sales and use taxes
What goods are subject to sales and use tax in your state (at both state and local level)?
In general, the following goods are subject to sales tax (subject to exclusions and exceptions):
- sales of tangible personal property, which includes:
- steam; and
- prewritten computer software, including prewritten software delivered electronically (N.J. Stat. Ann. §§ 54:32B-2(g), 54:32B-3(a));
- sales of specified digital products (N.J. Stat. Ann. § 54:32B-3(a));
- charges for hotel rooms or transient accommodations (N.J. Stat. Ann. § 54:32B-3(d)); and
- sales of prepared food in or by restaurants or similar establishments (N.J. Stat. Ann. § 54:32B-3(c)).
Although localities do not generally impose a sales tax in New Jersey, there are two exceptions.
Cape May County tourism sales tax
Authorized municipalities in Cape May County may require certain businesses to collect an additional 2% retail sales tax on certain tourism-related sales.
Atlantic City luxury sales tax
The tax is imposed on certain rentals, sales, and services within Atlantic City. The luxury sales tax rate is 9%, with the exception of alcoholic beverages sold by the drink, which are subject to a 3% rate. If the item is also subject to state sales tax, the maximum combined Atlantic City and New Jersey rates cannot exceed 12.625%.
More information on these local sales taxes can be found in Tax Topic Bulletin S&U-4.
What is the state sales tax rate?
As of January 1, 2018 the state sales tax rate is 6.625% (N.J. Stat. Ann. § 54:32B-3).
What is the range of local sales tax rates levied in your state?
The Cape May County tourism sales tax is imposed at a rate of 2%. The Atlantic City luxury sales tax is imposed at a rate of 9%. More information on these local sales taxes can be found in Tax Topic Bulletin S&U-4.
What goods are exempt from sales and use tax?
New Jersey exempts many different types of goods from sales tax. The categories of goods that are exempt from sales tax include:
- goods that are purchased for resale (N.J. Stat. Ann. § 54:32B-2(e));
- certain medical supplies (N.J. Stat. Ann. § 54:32B-8.1);
- most food items, other than candy, soft drinks, and prepared food (N.J. Stat. Ann. § 54:32B-8.2);
- food sold in schools (N.J. Stat. Ann. § 54:32B-8.3);
- clothing and footwear (N.J. Stat. Ann. § 54:32B-8.4);
- newspapers, magazines, and periodicals (N.J. Stat. Ann. § 54:32B-8.5);
- casual sales (N.J. Stat. Ann. § 54:32B-8.6);
- sales of gas other than natural gas, water, steam, or fuel delivered to consumers through mains, lines, pipe, or in containers or bulk (N.J. Stat. Ann. § 54:32B-8.7);
- motor, airplane, and railroad fuels sold to qualified buyers (N.J. Stat. Ann. § 54:32B-8.8);
- receipts from sales of tangible personal property sold through coin-operated vending machines of $0.25 or less (N.J. Stat. Ann. § 54:32B-8.9);
- sales of machinery and equipment used primarily in the production of tangible personal property or the production of certain utilities (N.J. Stat. Ann. § 54:32B-8.13);
- sales of tangible personal property and specified digital products purchased for use or consumption directly and exclusively in research and development (N.J. Stat. Ann. § 54:32B-8.14);
- wrapping supplies, where use is incidental to the delivery of tangible personal property (N.J. Stat. Ann. § 54:32B-8.15);
- tangible personal property used on farms (N.J. Stat. Ann. § 54:32B-8.16);
- school textbooks (N.J. Stat. Ann. § 54:32B-8.21);
- bibles or similar sacred scripture (N.J. Stat. Ann. § 54:32B-8.25); and
- flags of the United States of America or State of New Jersey (N.J. Stat. Ann. § 54:32B-8.26).
Are any services taxed?
Yes. Several types of services are subject to sales tax, including:
- telecommunications services (N.J. Stat. Ann. § 54:32B-3(f));
- services specified in N.J. Stat. Ann. § 54:32B-3(b), including:
- the production, fabrication, processing, printing, or imprinting of tangible personal property or a specified digital product, performed for a person who directly or indirectly furnishes the tangible personal property;
- the installation, maintenance, servicing, or repair of tangible personal property or a specified digital product not held for sale in the regular course of business (excluding laundry, tailoring, and similar services);
- the storage of all tangible personal property not held for sale in the regular course of business, or the furnishing of space for such storage;
- the maintenance, servicing, or repair of real property;
- mail-processing services;
- utility services provided to persons in New Jersey;
- tanning services;
- massage services;
- tattooing services;
- investigation and security services;
- information services;
- transportation services provided by a limousine operator;
- telephone answering services; and
- radio subscription services.
- admission charges to places of amusement (N.J. Stat. Ann. § 54:32B-3(e));
- initiation fees, membership fees, and similar fees (N.J. Stat. Ann. § 54:32B-3(h)); and
- parking and garage storage fees (N.J. Stat. Ann. § 54:32B-3(i)).
A list of common services, with an indication of whether each service is taxable or exempt, can be found in Tax Topic Bulletin S&U-4.
What filing requirements and procedures apply?
All businesses that sell taxable goods and services in New Jersey must register with the New Jersey Division of Revenue and Enterprise Services to collect sales tax. Businesses that are registered to collect sales tax must file a quarterly return using Form ST-50 and make quarterly or monthly payments depending on the amount of their prior and current receipts. Only taxpayers that collected more than $30,000 in sales and use tax in New Jersey during the prior calendar year, and collected more than $500 in the first and second month of the current calendar year, must make monthly payments. Monthly payments are made using Form ST-51. Taxpayers may file their quarterly sales tax returns online or by phone. The deadline for filing is on or before 11:59p.m. of the 20th day of the month after the end of the filing period. All payments must be made electronically.
For more information regarding filing requirements see N.J. Admin. Code § 18:24-11.2 and the New Jersey Division of Taxation’s “How Do You File and Pay New Jersey Sales Tax?” (last updated June 5, 2018).
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