New Jersey Sales Tax Guide 2024: Compliance, Rates, and Regulations for Businesses

Sales tax at a glance

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New Jersey sales tax rates & calculations in 2023

The New Jersey sales tax rate in 2023 is 6.625%. This comprises a base rate of 6.625% with no mandatory local rate. New Jersey does not have local sales tax jurisdictions, so the total tax rate remains 6.625% across the state.

List of local sales tax rates in New Jersey

New Jersey does not have local sales tax rates. The state-wide rate of 6.625% applies uniformly across all cities and counties.

Recent tax rate changes in New Jersey

FAQs

How to calculate New Jersey sales tax?

The sales tax rate in New Jersey is 6.625% statewide. There are no local rates.

To calculate the sales tax on a $100 purchase in New Jersey, you would do the following:

Tax = 6.625% x $100 = $6.625.

What is the difference between destination-based and origin-based sales tax?

• Destination-based states: The tax rate is based on the buyer's location. Charge the rate where the customer is.
• Origin-based states: The tax rate is based on the seller's location. Charge the rate where your business is located.

Is New Jersey destination or origin-based?

New Jersey uses destination-based sales tax. Charge the rate based on where the customer is located.

Is New Jersey a streamlined sales tax state?

Yes, New Jersey is a Streamlined Sales and Use Tax Agreement member. This simplifies sales tax compliance for businesses.

Sales tax nexus in New Jersey:

To be considered engaged in business, you need to meet specific criteria. These are known as nexus thresholds. If you reach nexus, it becomes mandatory to register for a sales tax license in the state.

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Cost of registering for a sales tax license in New Jersey

Registering for a New Jersey sales tax license is free. You can apply for the permit online through the New Jersey Division of Taxation's website. There are no upfront fees for the application process. However, it's crucial to maintain compliance with filing and payment deadlines to avoid any penalties or fees in the future.

FAQs

Do wholesalers need a NJ seller's permit?

New Jersey wholesalers still need a seller's permit. This allows you to collect sales tax from customers when you make retail sales. You also use the permit to give suppliers a resale certificate, so you don't pay sales tax on items for resale.

Do temporary sellers need an NJ seller's permit?

Even temporary sellers in NJ need a seller's permit. This includes vendors at trade shows, craft fairs, or other short-term events in the state. The permit lets you legally collect and remit NJ sales tax on your sales.

What's taxable and exempt in New Jersey

Let’s start with a list of taxable products and services in New Jersey.

• Tangible Products: Physical items are generally taxable.
• Digital Products: Goods delivered or accessed electronically, like media streaming services and eBooks.
• Specific Services: Some services, such as maintenance and repair, are taxable.
• Transient Accommodations: Short-term rentals like vacation rentals and rooms.
• Shipping Charges: If the item that you’re shipping is taxable, then shipping charges are also taxable.

Exemptions from sales tax in New Jersey

• Most Food and Drink: Items purchased in a food store for human consumption are generally exempt.
• Clothing: Most articles of clothing are exempt from sales tax.
• Prescription Drugs: Both prescription and many over-the-counter drugs are exempt.
• Educational Services: Tuition fees for educational institutions are generally exempt.
• Certain Agricultural Supplies: Farm machinery and livestock feed are exempt.
• Resale Items: Items purchased for resale are exempt when a valid resale certificate is provided.

FAQs

Are groceries taxable in New Jersey?

No, most groceries purchased for human consumption are not subject to sales tax in New Jersey.

Is clothing taxable in New Jersey?

No, most articles of clothing are exempt from sales tax in New Jersey.

Are digital products taxable in New Jersey?

Digital products that can be delivered electronically (ebooks, courses) are taxable in New Jersey. However, if the product can only be accessed and not delivered, you do not need to charge sales tax. 

Is SaaS taxable in New Jersey?

Software-as-a-service (SaaS) does not fall under the state's definition of an enumerated or taxable information service. New Jersey has stated that SaaS is exempt from sales tax unless the service meets the specific criteria to be classified as a taxable information service.

Excise and discretionary taxes in New Jersey

Excise taxes apply to specific goods or services in New Jersey. Discretionary taxes are local taxes that vary by city.

Excise taxes in New Jersey

Here’s a list of excise taxes in New Jersey 

Alcoholic Beverage Tax

• Beer: $0.12 per gallon
• Wine: $0.875 per gallon
• Liquor: $5.50 per gallon
• Apple Cider: $0.15 per gallon

Cigarette Tax: $2.70 per pack

Litter Control Fee

• Wholesale: 0.03% of Gross Receipts
• Retail: 0.0225% of Gross Receipts

Motor Fuels Tax

• Gasoline: $0.105 per gallon
• Diesel: $0.135 per gallon
• Aviation fuel: $0.02 per gallon

Prearranged Ride Surcharge

• Per Rider - Single: $0.50
• Per Rider - Shared Ride: $0.25

Social Equity Excise Fee (SEEF): Cannabis – $1.52 per ounce

Food and beverage tax in New Jersey

New Jersey does not have a general sales tax on food and beverages. However, there are excise taxes on some specific items like alcoholic beverages.

Remote sellers in New Jersey

Remote sellers are subject to New Jersey sales tax if they meet the economic nexus threshold of $100,000 in annual sales or 200 separate transactions.

Prepaid sales tax rates for fuel products in New Jersey

• Gasoline: $0.105 per gallon
• Diesel: $0.135 per gallon

Discretionary taxes in New Jersey (local sales tax)

New Jersey does not have local sales taxes, but it does have Urban Enterprise Zones, where qualified businesses can charge a reduced sales tax rate.

Collecting sales tax in New Jersey

Now, let’s look at the steps to collect sales tax in New Jersey. 

How to collect sales tax in New Jersey if you are not based in New Jersey (out-of-state)

If you are located outside New Jersey but sell to NJ customers over the $100,000 or 200 transaction thresholds, you must collect and remit NJ sales tax.

• Register for an NJ sales tax permit on their website. Then, charge 6.625% sales tax on all taxable NJ sales. Collect this at checkout.
• File NJ sales tax returns monthly or quarterly and submit payments on time. Keep records of your NJ sales and tax collected.

Should you collect sales tax on shipping charges in New Jersey?

Yes, in New Jersey, if the item sold is taxable in New Jersey, the shipping charge is also taxable. For mixed shipments of taxable and non-taxable items, the entire shipping charge is taxable.

Filing and paying taxes in New Jersey

Let’s look at how to file and pay taxes in New Jersey. After registering your business for Sales Tax collection in New Jersey, you must submit quarterly returns and remit payments. 

However, certain businesses are obligated to make monthly payments as well. Monthly payments are necessary if:

• Your business gathered over $30,000 in Sales and Use Tax in New Jersey in the previous year.
• You accrued over $500 in Sales and Use Tax in the first or second month of the ongoing quarter.

How to file and pay

• File electronically: Use the online filing dashboard or the EZ Telefile Systems by calling 1-877-829-2866 (609-341-4800) and selecting option 1.
• Forms: Use ST-50 for quarterly returns and ST-51 for monthly payments.
• Payment methods: Electronic check (e-check), electronic funds transfer (EFT), or credit card (fees apply).

Filing schedule for New Jersey taxes

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Exceptional cases

• Zero sales: You must file a return for each quarter even if no tax is due or sales were made.
• Mistakes: File an amended return for the same calendar quarter in which the error occurred.

FAQs

What are the New Jersey sales tax due dates? 

For quarterly filers, returns are due by the 20th of the month after each quarter ends.

Do I Need to File if No Tax Was Collected?

You must file a return even if you didn't collect any sales tax, as you may be eligible for a refund.

Can I Get a Filing Extension?

You can request an extension, but it must be sent in one month after the original due date and payment.

Can I Amend a Return?

You can amend New Jersey returns by phone, online, or by filing Form A-3730 for a refund.

What are the penalties for late or incorrect sales tax filings in New Jersey?

New Jersey charges a 5% penalty for late or inaccurate filings, plus another 5% if you miss the due date. But penalties won't exceed 25% of the tax amount for that filing period.

Audit and appeals process in New Jersey for sales tax

The sales tax audit process in New Jersey is a formal and thorough examination of a business's financial records, sales transactions, and tax reporting to ensure full compliance with state tax laws and regulations.

The New Jersey Division of Taxation may initiate a sales tax audit on a business for a variety of reasons, such as:

• Discrepancies or irregularities noticed during review of filed sales tax returns
• Random selection for routine audit
• Follow-up on potential non-compliance issues or complaints received

If you disagree with an audit assessment, you can file a complaint with the Tax Court of New Jersey. This must be done within 90 days from the date of the audit notice. 

What to expect during the sales tax audit

If your business is selected for a sales tax audit, you can expect auditors to comprehensively inspect your sales records, purchase invoices, bank statements, and any other documents that detail your sales transactions and tax collection activities.

Auditors may request additional records and ask clarifying questions. If issues arise during the audit, the auditors may expand the scope to dig deeper into your documents. A lack of cooperation can also trigger an expansion in the audit.

After the audit

Once the audit is completed, you'll receive a notice of assessment detailing audit findings. If you disagree with it, you can file a written appeal within 90 days requesting an informal conference to resolve issues.

If you’re unsatisfied after initial appeals, you can file a petition with the Tax Court, which will issue a legally binding determination after a formal hearing.

You can appeal the Tax Court's decision, but this won't stop collections. A safer option is to pay first and then seek a refund if the dispute is unresolved before your filing due date. 

Additional Information

• Address: Tax Court Management Office, PO Box 972, Trenton, NJ 08625-0972
• Phone Number: (609) 292-5082

How to register for sales tax in New Jersey

If you are an online business selling taxable goods or services to New Jersey customers, you must register to collect and remit NJ sales tax.

• Go to the NJ Division of Revenue site and complete the online application to register for a sales tax permit. 
• You'll need your EIN, business details, NAICS code, etc.
• Once approved, you'll receive a sales tax permit/certificate. Display this permit at your business.
• Use your permit to set up an NJ tax portal account. File and pay your sales tax returns electronically based on your assigned schedule.
• At checkout, calculate NJ sales tax based on the order destination. Start collecting NJ sales taxes, file returns, and remit the tax to the state.

Don’t forget to keep detailed sales records and comply with any audit requests as you engage in business in the state.

More information

For sales tax filing and appeals in New Jersey, you can contact:

• Authority: New Jersey Division of Taxation
• Phone: (609) 292-6400
• Website: https://www.state.nj.us/treasury/taxation/

There you have it—a comprehensive guide on New Jersey's sales tax regime. Need help filing taxes for your ecommerce store? Get a demo with Numeral now.