The 2016 New Jersey State Sales Tax
What is the 2016 New Jersey Sales Tax Rate?
The New Jersey state sales tax rate is 7%, and the average NJ sales tax after local surtaxes is 6.97%.
- Groceries, clothing and prescription drugs are exempt from the New Jersey sales tax
- Counties and cities are not allowed to collect local sales taxes
- New Jersey has no special sales tax jurisdictions with local sales taxes in addition to the state sales tax
- New Jersey has a lower state sales tax than 55.8% of states
Items such as groceries, household paper products, medicine, and clothes are exempt from all sales taxes. Gasoline purchases are not subject to the New Jersey Sales Tax, but a Gasoline Excise Tax does apply.
Certain businesses located within "Urban Enterprise Zones", including Salem County, are required to only collect a reduced sales tax of 50% the state sales tax rate (3.50%). A full list of these Enterprise Zones can be found on the New Jersey Division of Taxation's website.
In addition to the state sales tax, certain items in tourist-heavy Atlantic City and Cape May County are subject to additional local sales taxes.Some counties in New Jersey are not subjected to the statewide sales tax rate, but still collect a local rate of 3.5%.
If you are a New Jersey business owner, you can learn more about how to collect and file your New Jersey sales tax return at the 2016 New Jersey Sales Tax Handbook .
New Jersey Sales Tax Exemptions
New Jersey doesn't collect sales tax on purchases of most prescription drugs, groceries and clothing. In most states, necessities such as groceries, clothes, and drugs are exempted from the sales tax or charged at a lower sales tax rate.
Some items may not be eligible for these reduced sales tax rates, such as expensive clothing, unhealthy food or drinks like soda, and certain non-essential pharmaceuticals. New Jersey does not treat candy or soda as groceries, which means they are not subject to reduced grocery sales tax rates. Other items including gasoline, alcohol, and cigarettes are subject to various New Jersey excise taxes in addition to the sales tax.
In some states, items like alcohol and prepared food (including restaurant meals and some premade supermarket items) are charged at a higher sales tax rate. The NJ sales tax applicable to the sale of cars, boats, and real estate sales may also vary by jurisdiction. New Jersey's sales tax rates for commonly exempted items are as follows:
$100 Restaurant Dinner
$100 of groceries
$100 in clothes
$100 of consumer products
$7.00 sales tax
$0.00 sales tax
$0.00 sales tax
$7.00 sales tax
New Jersey Sales Tax Exemption Certificate
Unlike a Value Added Tax (VAT), the New Jersey sales tax only applies to end consumers of the product. Individuals and companies who are purchasing goods for resale, improvement, or as raw materials can use a New Jersey Sales Tax Exemption Form to buy these goods tax-free.
Companies or individuals who wish to make a qualifying purchase tax-free must have a New Jersey state sales tax exemption certificate, which can be obtained from the New Jersey Division of Revenue. On making an exempt purchase, Exemption Certificate holders may submit a completed New Jersey Sales Tax Exemption Form to the vendor instead of paying sales tax.
Sales tax exemption forms (as well as business sales tax id applications, sales tax returns, and the full New Jersey sales tax code) can be downloaded from the New Jersey Division of Revenue here .
New Jersey Sales Tax Calculator
Whenever you make a purchase at a licensed New Jersey retailer, your sales tax will be automatically calculated and added to your bill. To lookup the sales tax due on any purchase, use our New Jersey sales tax calculator.
New Jersey Use Tax
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If you buy goods and are not charged the New Jersey Sales Tax by the retailer, such as with online and out-of-state purchases, you are supposed to pay the 7% sales tax (less any foreign sales tax paid) for these items yourself as the New Jersey Use Tax.
Your are expected to voluntarily list your liable purchases on a New Jersey Use Tax Return, which should be attached with payment to your New Jersey Income Tax Return. Historically, compliance rates with with the New Jersey Use Tax have been low.
New Jersey Local Sales Taxes
New Jersey does not allow local jurisdictions like cities or counties to collect a local sales tax. The New Jersey state sales tax of 7% is applicable statewide. You can view the sales tax rates for various cities in New Jersey here.
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