The ultimate guide to New Jersey sales tax

2024 overview of sales tax in New Jersey

Welcome to Kintsugi's rundown on tax rates in the state of New Jersey. New Jersey's sales tax rates can vary depending on state, county/city, and local tax rates.

The base state sales tax New Jersey rate is 6.625%, but rates can fluctuate when local taxes are added.

At the county level, the highest combined rate can be found in Bergen County at 7%, while the lowest is typically seen in Sussex County at the base rate of 6.625%.

At the district level, Hoboken's Urban Enterprise Zone (UEZ) offers a reduced rate of 3.3125%, while districts like Atlantic City can reach up to 6.625%.

Sales tax range in New Jersey

In 2024, New Jersey continues to maintain a standard state sales tax rate of 6.625%. There are no major changes anticipated from the 2023 rates. However, there are nuances in specific localities and tax applications, which are important to note when comparing the two years.

In 2024, New Jersey introduced specific measures to ensure clarity regarding what is sales tax NJ authorities enforce to enhance economic stability. This involved consistent application of the 6.625% rate across most transactions, alongside exemptions and targeted tax holidays designed to enhance economic engagement. These initiatives aim to provide stability and predictability for both businesses and consumers in planning their fiscal activities.

Urban Enterprise Zones (UEZs): In 2023, businesses located within Urban Enterprise Zones enjoyed a reduced sales tax rate of 3.3125%. This stands unchanged in 2024.

Sales Tax Holidays: New Jersey initiated sales tax holidays on certain items in 2023, such as back-to-school supplies and energy-efficient appliances, where the sales tax was temporarily reduced or exempted, addressing questions like, 'what is New Jersey sales tax during these holidays?'. This practice continues in 2024 with similar items and time frames.

Exemptions: Essential items such as groceries, clothing, and prescription drugs remained exempt from sales tax in 2023 and will continue to be tax-free in 2024.

Comparing 2024 to 2023, using tools like the NJ sales tax calculator, New Jersey's approach to sales tax shows a clear consistency with no shifts in the primary tax rates or application of exemptions. The UEZ program and tax holidays remain pivotal strategies in maintaining economic incentives and promoting consumer spending.

Calculating New Jersey sales tax

Identify the Taxable Item: Determine if the product or service is subject to sales tax.

State Sales Tax Rate: The state sales tax rate in New Jersey is currently 6.625%.

Calculate State Sales Tax: Multiply the purchase price by 6.625%.

Local Sales Tax Rates: New Jersey does not have local sales taxes, sticking with the NJ state sales tax rate of 6.625%.

E-commerce Sales: E-commerce transactions are subject to the state’s 6.625% sales tax rate.

SaaS (Software as a Service): SaaS products are typically considered taxable and are subject to the 6.625% state sales tax rate.

Services: Not all services are taxable; identify whether the specific service is subject to tax. For taxable services, use the state tax rate of 6.625%.

Exemptions: Identify if any exemptions apply (e.g., certain medical equipment or food items).

Collect the Tax: Ensure the correct sales tax is collected from the customer at the time of sale.

Report and Remit: Report collected sales tax to the New Jersey Division of Taxation. Remit the collected sales tax by the specified deadline according to state regulations.

Understanding use tax in New Jersey

Use tax in New Jersey is a critical but sometimes overlooked aspect of the state's tax system. It applies to the use, storage, or consumption of tangible personal property or certain services when sales tax has not been collected by the seller. For instance, if you purchase an item out of state, online, or through a catalog, and no New Jersey sales tax is paid, you are required to pay use tax. The use tax rate is identical to the state’s NJ sales tax rate, which is 6.625%.

Understanding when use tax is applicable can save you from penalties and interest charges. Common scenarios include buying from out-of-state or online vendors who do not charge New Jersey sales tax, importing personal items purchased abroad, or acquiring taxable goods or services in another state where the tax rate is lower than New Jersey's. Businesses must also be vigilant, as they are responsible for using tax compliance on out-of-state purchases of office supplies, equipment, or any other taxable items.

Individuals and businesses can report use tax in several ways. For individuals, the use tax can be reported and paid annually as part of the New Jersey Gross Income Tax return. Businesses generally report use tax on the New Jersey Sales and Use Tax return (Form ST-50/ST-51) or on the Annual Business Use Tax Return (Form ST-18). Keeping detailed records of all purchases subject to use tax is crucial for accurate reporting.

Failure to pay the appropriate use tax can result in assessments, penalties, and interest charges. The New Jersey Division of Taxation conducts audits and has the authority to impose fines for non-compliance. Therefore, understanding your obligations and ensuring accurate and timely payment of use tax is essential for both individuals and businesses operating in New Jersey.

Recent changes to New Jersey sales tax

For those wondering, "What is the sales tax in New Jersey?" the state has a standard sales tax rate of 6.625%. This tax applies to most goods and services purchased within the state. However, there are certain items that may be exempt from this tax, such as groceries, clothing, and prescription medications. Additionally, some Urban Enterprise Zones in New Jersey offer reduced sales tax rates to encourage economic development. It's essential for both consumers and businesses to be aware of the applicable sales tax rates in New Jersey to ensure proper tax collection and compliance.

In 2024, New Jersey introduced several changes to its sales tax policy compared to 2023. Key amendments include:

Sales Tax Rate: The general sales tax rate remained at 6.625%, consistent with 2023. No increase or decrease was implemented as of January 1, 2024.

Online Sales: Starting February 15, 2024, New Jersey enforced stricter regulations on online sales tax collection, ensuring all remote sellers meeting a $100,000 sales threshold or 200 transactions in the state must collect and remit sales tax. This clarifies and enhances the enforcement from the 2023 policy, which had similar thresholds but less rigid enforcement mechanisms.

Luxury Tax: Effective March 1, 2024, New Jersey imposed a new 2% surtax on luxury items costing over $50,000, such as high-end automobiles, boats, and jewelry. In 2023, luxury items were taxed at the standard rate without an additional surtax.

Renewable Energy Products: On April 1, 2024, New Jersey expanded the sales tax exemption for renewable energy products to include energy storage systems and electric vehicle charging stations. In 2023, exemptions were limited primarily to solar panels and wind turbines.

Grocery Staple Clarification: Effective May 1, 2024, New Jersey clarified the definition of grocery staples eligible for the sales tax exemption. More comprehensive guidelines were issued to distinguish taxable non-essential food items from non-taxable essentials, addressing ambiguities that existed in 2023.

Seasonal Sales: For the back-to-school period from August 1 to August 31, 2024, New Jersey introduced a temporary sales tax holiday on school supplies, clothing, and computers priced under $1,000, aiming to alleviate financial burdens on families. This initiative was an extension and expansion of the short-lived one-week holiday offered in 2023.

Excise and discretionary taxes and other sales tax considerations in New Jersey

Excise Taxes

Alcoholic Beverages: Spirits are taxed at $5.50 per gallon. Wine is taxed at $0.875 per gallon. Beer is taxed at $0.12 per gallon.

Tobacco Products: Cigarettes are taxed at $2.70 per pack of 20. Other tobacco products, like cigars and smokeless tobacco, have varying tax rates typically reflecting a percentage of the wholesale price.

Motor Fuels: Gasoline is taxed at 41.4 cents per gallon. Diesel fuel is taxed at 48.4 cents per gallon.

Marijuana (if legalized and regulated): Excise taxes could be applied, but the specifics would depend on the legislative framework in place by 2024.

Discretionary Taxes

While New Jersey doesn't typically have county-level discretionary sales taxes as seen in some other states, there can be targeted taxes implemented by municipalities for specific purposes like tourism or transportation infrastructure.

Sales Tax Considerations

General Sales Tax: The state sales tax rate is 6.625%. This applies to most retail sales, leases, and rentals of goods, as well as certain services.

Urban Enterprise Zones (UEZ): Businesses in designated UEZs are eligible for a reduced sales tax rate of 3.3125%.

Exemptions: Certain items are exempt from sales tax, including most clothing, prescription drugs, and groceries. Some services, like professional services (legal, medical), are generally not subject to sales tax.

Use Tax: The use tax applies to items purchased out-of-state but used in New Jersey. This is meant to ensure that sales tax is collected on all taxable items, regardless of where they were purchased.

Internet Sales: Online retailers are required to collect sales tax on sales to New Jersey consumers, as the state adheres to the South Dakota v. Wayfair decision which allows states to require sales tax collection even from out-of-state sellers.

Luxury Taxes: New Jersey has specific taxes on certain luxury items, like yachts and horses, which could carry additional tax implications.

Understanding nexus in New Jersey for local and out-of-state sellers

Physical nexus

2023

• A seller with a physical presence, such as a store, warehouse, or office in New Jersey, is considered to have a physical nexus.
• Employees or representatives conducting business activities in New Jersey contribute to a physical nexus.
• Owning or leasing property in New Jersey establishes a physical nexus.
• Delivering goods to customers in New Jersey using the seller’s vehicles creates a physical nexus.

2024

• Sellers with any physical presence, including temporary or sporadic use of facilities, continue to establish a nexus.
• Physical presence now includes occasional business activities, such as seasonal booths or trade show presence.
• Leasing or owning property remains a determinant, with enhanced scrutiny on short-term leases.
• Presence of independent contractors acting on behalf of the retailer strengthens the nexus criteria.
• Frequent delivery using the seller’s or third-party logistics provider’s vehicles is now emphasized for establishing a nexus.

2023 to 2024 Comparison

• 2024 maintains the requirement for physical presence but extends to temporary or intermittent use.
• Business activities in 2024 include occasional and seasonal engagements, expanding from regular in-person activities.
• Leasing property still counts but with more attention to even short-term commitments.
• Independent contractors’ roles are more impactful for nexus determination in 2024.
• Delivery criteria now highlight the role of third-party logistics in creating a nexus, alongside seller’s direct delivery methods.

Economic nexus

In 2024, New Jersey's economic nexus requirements for sales tax maintain the thresholds set in 2023. Businesses must collect and remit sales tax if they meet specific criteria based on sales and transaction numbers.

Thresholds for 2023 and 2024

Both years require remote sellers to collect sales tax if they have gross revenue from sales of tangible personal property, specified digital products, or services delivered into New Jersey exceeding $100,000 during the current or previous calendar year. This threshold does not include exempt sales.

Alternatively, both years stipulate that businesses must collect sales tax if they have 200 or more separate transactions into New Jersey during the current or previous calendar year.

Marketplace Facilitators in 2023 and 2024

Both years require marketplace facilitators to collect and remit sales tax on behalf of sellers using the platform if the facilitator meets the economic nexus thresholds (over $100,000 in sales or 200 transactions).

Facilitators are liable for tax collection regardless of whether individual sellers surpass the nexus thresholds themselves.

Enforcement in 2023 and 2024

Both years involve similar enforcement mechanisms. Non-compliance can lead to audits, penalties, and interest on uncollected taxes.

Both years include provisions for voluntary disclosure agreements, allowing businesses to come into compliance partially or fully without severe penalties.

Exemptions and Special Considerations in 2023 and 2024

Both years exempt certain types of sales from counting towards the nexus thresholds, such as wholesale sales and sales of exempt services. However, businesses should verify specific exemptions as classifications can be intricate.

Both years include special rules for certain industries, with particular attention given to remote software, digital services, and marketplace sales.

Affiliate nexus

Affiliate nexus rules refer to the conditions under which out-of-state sellers must collect sales tax in a particular state due to their relationship with in-state affiliates. In New Jersey for 2024, the following changes are observed compared to 2023:

Thresholds: As of 2024, out-of-state sellers and affiliates are required to collect sales tax if they have gross revenue from sales of tangible personal property, digital goods, or services exceeding $100,000 or 200 transactions within the current or previous calendar year. This remains unchanged from 2023, maintaining the same economic nexus thresholds.

Click-Through Nexus: Significant adjustments have been made in 2024. The click-through nexus provision still mandates that out-of-state retailers soliciting sales via a commission-based relationship with a New Jersey resident meet the same previous year's threshold of $10,000 in sales. However, additional scrutiny and stricter documentation requirements have been introduced, necessitating detailed records of all interactions and solicitation methods, compared to more lenient standards in 2023.

Marketplace Facilitator Rules: For 2024, marketplace facilitators (e.g., Amazon, eBay) must continue to collect and remit sales tax on behalf of sellers using their platform if they exceed $100,000 in sales or 200 transactions. This remains consistent with 2023 parameters. However, compliance enforcement has tightened, with increased penalties for inaccuracies in tax remittance and reporting.

Registration and Reporting: Changes in the registration process for 2024 include the implementation of a more streamlined online registration system aimed at reducing processing times and improving user experience. In contrast, 2023 required more manual steps and longer wait times for registration approval.

In-State Presence: New for 2024, the state's definition of substantial physical presence has expanded to include minimal non-sales activities, such as warehousing or drop shipping, that previously did not constitute nexus in 2023. This leads to a broader range of businesses being liable for sales tax collection.

Click-through nexus

Click-through nexus refers to a tax law provision where businesses with certain types of business activities, even without a physical presence, are required to collect and remit sales tax. For 2024, New Jersey’s click-through nexus rules maintain the standard that any out-of-state retailer must collect sales tax if it surpasses a specified amount of sales within the state. Changes from 2023 to 2024 in New Jersey’s click-through nexus:

Sales Threshold

2023 – Threshold set at $100,000 in sales or 200 transactions, measured over the previous or current calendar year.

2024 – Remains consistent at $100,000 in sales or 200 transactions, ensuring continuity in tax obligations for out-of-state retailers.

Affiliate Nexus Implications

2023 – Affiliate nexus includes scenarios where businesses have relationships with New Jersey-based affiliates linking to the retailer's site, generating sales.

2024 – Still applies, but refined to capture more digital referral activities, such as social media influencers based in New Jersey driving traffic and sales.

Compliance and Enforcement

2023 – Focused on traditional e-commerce transactions with some emphasis on varying enforcement strategies.

2024 – Expanded proactive enforcement targeting newer digital channels, using advanced data analytics to track and identify non-compliant out-of-state retailers.

Reporting Requirements

2023 – Minimal reporting beyond what was necessary to establish sales thresholds and maintain compliance.

2024 – Increased reporting detail requirements assisting tax authorities in better tracking and validating nexus compliance by out-of-state retailers.

Technological Investments

2023 – Basic technology use for compliance monitoring.

2024 – Enhanced use of artificial intelligence and machine learning within New Jersey's Department of Treasury for superior detection and audit processes related to click-through nexus.

Marketplace nexus

In 2024, New Jersey's marketplace nexus legislation for sales tax continues to expand upon the foundational laws set in prior years, reflecting the state's dynamic approach to taxation in the digital age. Here are key elements for 2024 compared to 2023:

Thresholds and Economic Nexus

2024: The economic nexus threshold remains firm at $100,000 in gross revenue from sales or 200 separate transactions during the year, unchanged from the previous year.

2023: New Jersey set these thresholds, aiming to capture a broad range of e-commerce.

Marketplace Facilitators

2024: Marketplace facilitators remain responsible for collecting and remitting sales tax on behalf of third-party sellers if the facilitator's sales to New Jersey exceed the threshold criteria.

2023: Initial implementation of these requirements ensured broader tax compliance among diverse online retailers.

Enforcement and Compliance

2024: Increased vigilance and enhanced technologies are employed to monitor compliance, though fundamental enforcement policies remain similar.

2023: Adoption of initial monitoring technologies and methods for ensuring marketplace facilitator adherence.

Vendor Registration

2024: Continued obligations for out-of-state vendors to register if thresholds are surpassed, reinforcing the existing broad scope of vendor accountability.

2023: Mandatory registration and compliance measures introduced, affecting a significant number of out-of-state entities.

Penalties and Audits

2024: Penalties for non-compliance have been reviewed, with potential increases for egregious cases, demonstrating the state's intent to enhance enforcement.

2023: Standard penalties and audits were initially codified, laying the groundwork for rigorous tax collection practices.

Trade shows

Register with NJ Division of Taxation: Exhibitors must register for a sales tax permit.

Collect Sales Tax: Sales of taxable goods and services must include NJ sales tax, currently 6.625%.

Temporary Sales Locations: Trade show sales require temporary business registration if not regularly operating in NJ.

Filing Sales Tax Returns: File returns based on reporting period—monthly or quarterly.

Seasonal Vendor Exception: Seasonal businesses participating in only one show per year may have different requirements.

Out-of-State Retailers: Must collect NJ sales tax if business presence is established through trade shows.

Document Sales: Keep detailed records of sales and taxes collected at trade shows.

Use Tax Compliance: Comply with NJ use tax for equipment and materials brought into the state for shows.

Exempt Sales: Exemptions like resales require proper exemption certificates at time of transaction.

Penalties for Non-Compliance: Failure to comply may result in penalties, interest, and fines.

Fulfillment by Amazon and nexus

Fulfillment By Amazon (FBA) allows sellers to store products in Amazon's fulfillment centers. Amazon handles storage, packaging, and shipping. Sellers enroll in FBA, ship inventory to Amazon, and monitor inventory levels. When a customer places an order, Amazon picks, packs, and ships the item. Amazon also handles returns and customer service.

In New Jersey, as of 2024, FBA sellers must be aware of sales tax obligations. Sales tax requirements apply to remote sellers and marketplace facilitators. FBA sellers need to register for a New Jersey sales tax permit. FBA sellers must collect sales tax on sales to New Jersey customers. The state tax rate is 6.625%, with some local variations. Sellers should utilize proper tools or software for sales tax compliance. Failure to comply with sales tax regulations can result in penalties. Regularly monitor changes in New Jersey tax laws.

Permits, certificates and sales tax registration in New Jersey

To register for sales tax in New Jersey in 2024, start by obtaining a New Jersey Certificate of Authority by filing Form NJ-REG online through the New Jersey Division of Revenue and Enterprise Services. You'll need your business information, including your EIN, business entity type, and contact details. Once registered, you'll receive your certificate to collect sales tax, allowing compliance with state tax regulations and periodic filings.

Registering for sales tax collection in New Jersey

To register for sales tax collection in New Jersey in 2024, you'll need to follow these steps:

Determine if You Need to Register: If you are engaged in selling taxable goods or services in New Jersey, you need to register for sales tax collection.

Prepare the Required Information: Before you start the registration process, gather necessary information such as your business name, address, federal employer identification number (FEIN), and details about your business structure (e.g., sole proprietorship, partnership, corporation).

Access the Online Registration System: Go to the New Jersey Division of Revenue and Enterprise Services (DORES) online portal. Since you requested no external links, search for the online registration system on the New Jersey Division of Revenue's official website.

Complete the NJ-REG Form: This is the online business registration application form. You will need to provide details about your business, including:

• Legal Name and Trade Name of the Business
• FEIN or Social Security Number (for sole proprietors)
• Business Type and Structure
• Contact Information
• Business Activity Description
• Details of Ownership

Submit the Registration: Once you have filled out the NJ-REG form, review all information for accuracy and submit it. After submission, you will receive a confirmation that your application has been received.

Receive Your Certificate of Authority: Once your registration is processed, you will receive a Business Registration Certificate (BRC) and a New Jersey Certificate of Authority to collect sales tax. This certificate authorizes you to collect sales tax from customers and must be displayed at your place of business.

Filing and Paying Sales Tax: After registration, you will need to file periodic sales tax returns and remit the collected sales tax to the New Jersey Division of Taxation. Be sure to understand the due dates and requirements for filing returns (monthly, quarterly, or annually, depending on the volume of sales).

Keep Records: Maintain detailed records of all your sales transactions to ensure compliance and for easy reference in case of an audit.

Cost of registering for sales tax in New Jersey in 2024

In New Jersey, there is typically no cost to register for a sales tax permit. Registration can be completed online through the New Jersey Division of Revenue and Enterprise Services. You will need to complete Form NJ-REG, which is the Business Registration Application, to get a sales tax permit.

It's always a good idea to double-check with the latest guidelines from the New Jersey Division of Taxation or consult with a tax professional to ensure there are no changes or additional requirements for 2024.

Federal tax ID requirements for registering

In New Jersey, if you are registering for sales tax, you generally need an Employer Identification Number (EIN). An EIN is a unique identifier assigned to your business by the IRS and is commonly used for tax purposes, including sales tax.

To obtain an EIN, you will need to apply through the Internal Revenue Service (IRS). You can apply for an EIN online, which is the fastest method.

Here is the link to apply for an EIN: IRS EIN Application

Once you have your EIN, you can proceed to register for sales tax in New Jersey through the New Jersey Division of Revenue and Enterprise Services. You can do this online through their website.

Here is the link to register for sales tax in New Jersey: New Jersey Division of Revenue and Enterprise Services - Business Registration

Streamlined sales tax program and New Jersey

Yes, New Jersey is part of the Streamlined Sales Tax (SST) Program.

The state joined the SST initiative to simplify and modernize sales and use tax administration to reduce the burden of tax compliance for businesses through uniform tax rules and registrations. As of 2024, New Jersey remains a member of this program.

Acquiring a business and registering for sales tax in New Jersey

To register for sales tax in New Jersey when acquiring a business, you need to follow these essential steps:

Business Registration: First, you must register your business with the state of New Jersey. This process involves filing a Business Registration Application (Form NJ-REG) with the New Jersey Division of Revenue and Enterprise Services.

Tax Identification Number: Obtain a New Jersey Tax Identification Number. This number is necessary for tax reporting and filing purposes and is provided upon registering your business.

Transfer of Sales Tax Obligations: If the business you are acquiring was already registered for sales tax, you need to coordinate the transfer of sales tax obligations. This may involve submitting a form or notifying the Division of Taxation of the change in ownership.

Legal Documentation: You will need to provide documentation of the purchase or acquisition of the business. This often includes a copy of the purchase agreement and any other related documents detailing the transfer of ownership.

Sales Tax Certificate of Authority: Apply for a Sales Tax Certificate of Authority, which permits your business to collect sales tax from customers. This can be done through the same NJ-REG form or separately if needed.

Compliance with Tax Laws: Ensure that the business is in compliance with New Jersey tax laws, including filing any outstanding sales tax returns and ensuring that all back taxes, if any, are settled.

Vendor’s License: Depending on the nature of the business, you might need additional permits or licenses, such as a vendor’s license, to operate.

Record Keeping: Maintain accurate records of all sales, purchases, and tax remittances as you will be required to report and pay the applicable sales tax to the New Jersey Division of Taxation.

Contact Information: Keep your contact information up to date with the Division of Taxation to receive important updates and communications regarding sales tax laws and policies.

Other New Jersey registrations to consider

In New Jersey, alongside sales tax registration, you may need to consider several other registrations and filings depending on the nature of your business:

Employer Identification Number (EIN): If you plan to hire employees, you need to obtain an EIN from the IRS.

Business Registration Certificate: All businesses must register with the New Jersey Division of Revenue and Enterprise Services to obtain a Business Registration Certificate.

Unemployment Insurance and Disability Insurance: If you have employees, you are required to register for unemployment insurance and temporary disability insurance.

Employer Withholding Tax: You will need to register to withhold state income tax from your employees’ wages.

Workers' Compensation Insurance: Businesses with employees must carry workers' compensation insurance.

Local Permits and Licenses: Depending on your business type and location, you might need to obtain local permits or licenses.

Professional and Occupational Licenses: Certain professions and occupations require specific state licenses.

Trade Name Registration: If you are operating under a trade name (also known as a DBA or "doing business as"), you need to register the name.

Requirements for online sellers in New Jersey

In New Jersey, online sellers have specific requirements for sales tax collection, especially in the year 2024. If you are an online seller, you need to be aware of the following:

Economic Nexus Threshold: New Jersey has an economic nexus law that requires remote sellers to collect and remit sales tax if they exceed a certain threshold. As of 2024, this threshold is $100,000 in gross revenue from sales of tangible personal property, specified digital products, or services delivered into New Jersey, or 200 or more separate transactions into the state during the current or prior calendar year.

Sales Tax Registration: If you meet the economic nexus threshold, you must register for a New Jersey sales tax permit. Without this permit, you are not legally allowed to collect sales tax.

Collecting Sales Tax: Once registered, you must collect sales tax on taxable items sold to customers in New Jersey. The state imposes a standard sales tax rate, but certain items may have different rates or exemptions.

Remitting Sales Tax: You are required to remit the collected sales tax to the New Jersey Division of Taxation according to their prescribed filing schedule. This could be monthly, quarterly, or annually, depending on the volume of your sales.

Maintaining Records: Maintain detailed records of all transactions, including sales, collected taxes, and remitted taxes. This is crucial for compliance and in case of an audit by the state.

Marketplace Facilitators: If you sell through a marketplace facilitator (like Amazon or eBay), the facilitator may be responsible for collecting and remitting sales tax on your behalf. However, verify the facilitator’s responsibilities to ensure compliance with New Jersey laws.

Collecting sales tax in New Jersey

Understanding origin vs. destination sales tax collection

New Jersey is an origin-based sales tax collection jurisdiction. This means that the sales tax rate is determined by the location where the sale originates, not where the product is delivered or the buyer is located. Therefore, in New Jersey, sellers must apply the sales tax rate of the jurisdiction where their business is located, irrespective of the buyer's location within the state.

For more information, you can refer to the New Jersey Division of Taxation's website: https://www.state.nj.us/treasury/taxation/

Taxable products in New Jersey

In New Jersey, the sales tax applies to several product categories, and knowing which items are taxable can help you stay compliant and manage your spending effectively. Here's an overview of some of the key product genres that incur sales tax in New Jersey:

General Merchandise: This includes most tangible personal property such as electronics, furniture, apparel, and household items.

Prepared Foods and Beverages: Meals, snacks, and beverages sold by restaurants, cafes, and grocery stores (if consumed on the premises) are taxable. This also includes catering services and soft drinks.

Alcoholic Beverages: All alcoholic beverages including beer, wine, and spirits are subject to sales tax.

Clothing and Footwear (Certain Items): While most clothing and footwear are exempt, specialized items like sports equipment and protective gear are taxable.

Cosmetics and Personal Care Products: Tax applies to beauty products, toiletries, and over-the-counter medications.

Digital Products: Digital goods such as downloadable music, e-books, and online movies are generally taxed.

Automobiles and Vehicles: Sales tax is applied to the purchase of automobiles, motorcycles, and RVs. Rentals and leases of vehicles also incur tax.

Gas and Diesel Fuel: Fuel for vehicles and diesel fuel (other than for residential heating) is taxable.

Entertainment and Recreation: Tickets to events such as concerts, sports, and theater performances are subject to sales tax.

Certain Services: Not all services are taxable, but specific categories such as telecommunications, information services, and some installation or repair services are taxed.

Household Utilities and Telecommunication: Sales tax applies to household utilities including electricity and gas when not used for residential purposes. Telecommunications services including phone, internet, and cable TV services are also subject to tax.

It's important to note that while the above categories include common taxable items, New Jersey law has specific details and exceptions. For example, many grocery items (basic unprepared food and groceries) are exempt from sales tax. Additionally, certain items may be exempt if used for particular purposes, such as equipment for manufacturing or medical supplies under certain conditions.

Non-taxable products in New Jersey

In the state of New Jersey, there are several categories of products that are generally exempt from sales tax. As of now, some of the key product genres that are usually exempt include:

Clothing and Footwear - Most articles of clothing and footwear are exempt from sales tax.

Grocery Foods - Non-prepared food items sold in a grocery store, such as bread, milk, and vegetables, are typically tax-exempt.

Prescription Drugs and Over-the-Counter Medications - Prescription medications and certain over-the-counter drugs are not subject to sales tax.

Medical Equipment - Items such as wheelchairs and other medical equipment prescribed by a healthcare provider are often exempt.

Periodicals - Newspapers and certain periodical subscriptions are usually exempt.

Farmers' Purchases - Specific items used directly in farming can be tax-exempt.

For the most up-to-date information, you can visit the New Jersey Division of Taxation's website: New Jersey Division of Taxation.

Is SaaS taxable in New Jersey?

In 2024, Software as a Service (SaaS) remains taxable in New Jersey.

The state's sales tax applies to the purchase or use of remotely accessed software, including SaaS subscriptions. Businesses and consumers should account for this tax when calculating costs for cloud-based software services.

Are digital products taxable in New Jersey?

In New Jersey, as of 2024, digital products are subject to sales tax.

This includes items like downloaded software, e-books, music, and other digital media. The state treats these digital goods similarly to tangible products when it comes to taxation. Always check for any updates to ensure compliance.

Are services taxable in New Jersey?

In New Jersey, most services are generally not subject to sales tax, with some exceptions such as admission charges, information services, and certain professional services.

However, tangible personal property or digital goods linked to these services may still be taxable, depending on the specifics of the transaction.

Sales tax exemption certificates

In New Jersey, sales tax exemption certificates allow qualifying purchasers to buy goods or services without paying sales tax. These certificates are used by entities like non-profit organizations, governmental agencies, and businesses buying for resale.

To qualify, entities must complete forms such as the ST-5 for exempt organizations or the ST-3 for resale purposes. The seller must retain the certificate on file to validate the exemption during audits. Misuse of exemption certificates can result in penalties. It's crucial that detailed records are maintained, as they substantiate the legitimacy of tax-exempt transactions spanning various categories.

State tax holidays in New Jersey for 2024

Sales tax holidays are specific periods during which certain items are exempt from state sales tax, encouraging consumer spending and providing financial relief.

New Jersey does not have any scheduled sales tax holidays for 2024.

Filing sales tax returns in New Jersey

Filing sales taxes in New Jersey involves several key steps. Below is a concise guide:

Register Your Business: Register online via the New Jersey Division of Revenue and Enterprise Services to obtain a Certificate of Authority.

Collect Sales Tax: Charge the applicable state sales tax rate on all taxable goods and services sold.

Keep Accurate Records: Maintain detailed records of sales, returns, and tax collected for auditing purposes.

Determine Filing Frequency: The Division of Taxation will notify you of your filing frequency (monthly, quarterly, or annually), based on your business’s annual tax liability.

File Your Sales Tax Return: File sales tax returns online using the NJ Division of Taxation’s electronic systems.

Remit Collected Tax: Pay the collected sales tax when filing your return, either via electronic funds transfer or other accepted methods.

Due Dates: Ensure returns and payments are submitted by the due date to avoid penalties and interest.

Amend Returns if Necessary: If mistakes are made, file an amended return promptly to correct them. For comprehensive details, visit the New Jersey Division of Taxation.

Sales tax filing frequency

Certainly! In New Jersey, the frequency of sales tax filing depends on the volume of taxable sales and the amount of sales tax collected by a business over a given period. In general, businesses may be required to file and remit sales taxes on a monthly, quarterly, or annual basis.

Monthly Filing: Businesses that collect more than $30,000 in sales tax per year are typically required to file returns and remit the collected sales taxes on a monthly basis. Each monthly return is due on the 20th of the following month.

Quarterly Filing: Businesses that collect between $500 and $30,000 in sales tax per year are usually placed on a quarterly filing schedule. For these businesses, quarterly returns are due on the 20th day of the month following the end of the quarter. The quarters end in March, June, September, and December, and thus the corresponding due dates are April 20th, July 20th, October 20th, and January 20th.

Annual Filing: Businesses that collect less than $500 in sales tax per year generally file on an annual basis. The return for the entire year is due on January 20th of the following year.

Zero Sales: If a business has no sales or no tax due for a particular filing period, it must still file a “zero” return.

It is essential for businesses to determine their filing frequency based on their sales volume and ensure timely submissions to avoid penalties and interest. New businesses must estimate their sales tax collections to determine the appropriate filing frequency when registering with the state. Over time, the Division of Taxation may adjust a business’s filing frequency based on its actual sales tax collections.

Filing when no sales tax has been collected

In New Jersey, if a business registered for sales tax fails to collect sales tax on taxable goods or services, it can face serious consequences.

The business remains liable for the uncollected tax, which must be paid out of the business’s own funds. Additional penalties and interest may be imposed for non-compliance.

Furthermore, the state may conduct audits to assess the situation, potentially leading to further fines and administrative actions.

Penalties for late filing and non-payment of sales taxes

In the state of New Jersey, late sales tax filing and non-payment of sales taxes carry significant consequences. If businesses fail to file sales tax returns by the due date, they may incur penalties and interest. Late filing penalties typically include a 5% penalty per month on the tax due, up to a maximum of 25%.

Additionally, interest accrues on the unpaid tax from the original due date until the date of payment at the rate of 3% above the prime rate.

Non-payment of sales taxes is a serious offense in New Jersey. Businesses that do not remit the collected sales tax can face severe penalties, including fines and criminal charges. The state considers the collected sales tax as trust funds owned by the state, and misuse of these funds is treated as theft.

Penalties for non-payment can include a 10% late payment penalty, and continued non-compliance can lead to liens on business property, seizure of assets, and revocation of sales tax permits. Ensuring timely filing and payment of sales taxes is crucial for businesses to avoid these severe repercussions and maintain good standing with New Jersey tax authorities.

Sales tax discounts and incentives

In 2024, New Jersey continues to offer various sales tax incentives and discounts to support businesses within the state. One of the primary incentives includes the Urban Enterprise Zone (UEZ) program, which provides qualifying businesses in designated areas with reduced sales tax rates on purchases. Businesses participating in the UEZ program can benefit from a reduced state sales tax rate of 3.3125%, instead of the standard 6.625%.

Additionally, New Jersey provides exemptions and reduced rates for certain types of purchases that businesses might make. For example, manufacturing businesses can benefit from tax exemptions when purchasing machinery, equipment, or supplies used directly in the manufacturing process. Another significant area of exemption includes sales tax relief for research and development equipment used by qualifying scientific businesses in the state.

Energy and utility tax exemptions are also available for businesses looking to lower operational costs. Certain businesses can obtain exemptions from sales tax on energy use if they meet specific qualifications related to their operations.

These incentives and discounts aim to make New Jersey an attractive place for both new and existing businesses by reducing overall operational costs through targeted tax relief programs.

2024 sales tax filing due dates for New Jersey

Monthly: 20th of the following month

Quarterly: 20th after quarter end

Annually: January 20, 2025

Shipping and sales tax in New Jersey

When to pay tax on shipping in New Jersey

In New Jersey, businesses generally must collect sales tax on the total amount charged to the customer, including shipping and handling, if the items being shipped are taxable.

How It Works

• If the items sold are taxable, sales tax must be charged on the entire amount, including both the cost of the items and any shipping or delivery charges.
• If the items sold are exempt from sales tax, then the shipping charges for those items are also exempt.

Example Calculation

• If you sell taxable electronics and charge $100 for the item and $10 for shipping, the sales tax would apply to the total $110.
• If you sell exempt groceries and charge $50 for the items and $5 for shipping, no sales tax would apply to either the items or the shipping.