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New Jersey has a sales and use tax rate of 6.625 percent for sales of goods and services. It also allows businesses in certain economically distressed zones to collect and pay sales tax at half the rate of the State’s rate – at 3.3125 percent. It also has a luxury sales tax for Atlantic City.
Types of taxes
New Jersey has a state sales and use tax rate of 6.625 percent for most areas. It decreased the tax rate in urban enterprise zones and increased it in Atlantic City. The State also has several additional taxes and fees, including a tire fee and lodging tax.
Urban enterprise zones
Certain economically distressed cities are considered urban enterprise zones. A business in one of these zones can apply for a UZ-2 certificate, which allows the business to collect sales tax at half of the State’s rate.
To qualify for the lower 3.3125 tax rate, a buyer must accept delivery of the purchase at the seller’s business, or the seller must deliver the tangible personal property from the business location in the zone – not another business location.
Most urban enterprise zones are cities. Salem County is the only county as a whole that is an urban enterprise zone.
Sales and use tax
New Jersey businesses must collect sales tax on sales of tangible personal property and certain services. If a business does not resell the property or service and does not pay sales tax at the time of purchase, it must pay the use tax.
Additionally, if a consumer purchases tangible personal property out of state and the business does not charge New Jersey’s sales tax, the consumer must pay use tax. Finally, if the buyer pays another state’s sales tax and brings or takes delivery of the items in New Jersey, the consumer must pay the difference in the tax collected.
For example, if a consumer purchases a sofa in a state that charges 4 percent sales tax and brings the sofa to his home in New Jersey, the consumer must pay 2.625 percent use tax to the New Jersey Department of Taxation.
Lodging (Hotel room occupancy tax)
Transient accommodations, including hotels and motels, vacation rentals, rooms, houses, and similar lodging, are subject to the following taxes and fees:
- New Jersey sales tax of 6.625 percent.
- State occupancy fee of 5 percent. The fee is in addition to the State’s sales tax and the municipal occupancy fee.
- Atlantic City, Jersey City, Elizabeth, and Neward have an occupancy fee of 1 percent.
- Wildwood, Wildwood Crest, and North Wildwood have an occupancy fee of 3.15 percent.
- Municipal occupancy fee of 3 percent. The fee is in addition to sales tax and the state occupancy fee. Certain municipalities have a different fees, including:
- Newark, Atlantic City, Jersey City, Wildwood, Elizabeth, North Wildwood and Wildwood Crest are prohibited from enacting a municipal occupancy tax since they already impose local fees or taxes.
- West Long Branch Borough (Monmouth County) and Berkeley Township in Ocean County impose the municipal occupancy fee at the 2-percent rate.
Motor vehicle rental companies incur a $5 fee per day for each day they rent a motor vehicle if the rental period is 28 or fewer days. It is in addition to sales tax on the transaction.
Luxury tax rate
The Atlantic City Luxury Sales tax of 9 percent is levied on certain services, rentals and sales in Atlantic City. Alcohol is taxed at 3 percent.
If an item is subject to state sales tax and the luxury tax, the sales tax rate is “reduced to the extent that the city rate exceeds 6 percent.” The maximum sales tax rate and luxury tax rate allowed on combined rates is 12.625 percent.
Cape May County tourism sales tax
Predominantly tourism-related retail sales in Cape May have a 2 percent tourism sales tax in addition to the State’s sales tax. Businesses in Wildwood Crest, Wildwood, and North Wildwood must collect the tourism tax.
Businesses subject to the 2-percent tourism sales tax in addition to the State’s sales tax include:
- Hotels, motels, and other transient accommodations and lodging.
- Food and drink sold by taverns, restaurants, and similar establishments.
- Mobile sellers and other sellers of prepared food.
- Admission charges for amusement parks, rides, sporting events, exhibitions, musical and drama arts performances, movie theaters, and cover charges for cabarets and nightclubs.
Lodging is also subject to state sales tax, the tourism tax, a tourism assessment of 1.85 percent, and the state occupancy fee of 3.15 percent.
Thus, the total tax on a $100 per night room is:
- 100 times 6.625 percent equals 106.63
- 100 times 2 percent equals 102.00
- 100 times 1.85 percent equal 101.85
- 100 times 3.15 percent equals 103.15
- 100 times 5 percent (state occupancy fee) equals 105.00
The total for the room, if no other charges are incurred, is $118.63.
A business owner can also add the taxes together for a total of 18.625 percent. Multiply 100 by 18.625 for 118.63.
Meadowlands regional hotel use assessment
Lodging in the Hackensack Meadowlands District is subject to a 3 percent tax. The district is a 30.4 square-mile area along the Hackensack River that covers 14 municipalities in Hudson and Bergen Counties.
This assessment is in addition to the New Jersey sales tax rate and other fees and taxes imposed on lodging.
Motor vehicle tire fee
Businesses selling new tires, including the tires on new vehicles and new tires on used vehicles, are subject to a fee of $1.50 per tire. Tire retailers must list the tire fee as a separate transaction.
Marijuana excise tax
Recreational marijuana is taxed at the state sales tax rate of 6.625 percent.
P.L. 2019, c. 153 phases out the sales tax that is imposed on medical marijuana. The current sales tax on medical marijuana is 2 percent through June 30, 2022. On and after July 1, 2022, businesses selling medical marijuana no longer charge sales tax.
Liquor and beer often go through several sales before reaching a retailer. For example, a distributor might sell directly to a retailer in New Jersey or might sell to a wholesaler, who then sells the product to a retailer.
New Jersey collects liquor and beer taxes from the first distributor or wholesaler who sells or delivers to a retailer in New Jersey. The taxes are as follows:
- Beer: $0.12 per gallon.
- Wine: $0.875 per gallon.
- Liquor: $5.50 per gallon.
- Apple cider: $0.15 per gallon.
New Jersey imposes a tobacco and nicotine products wholesale sales and use tax. The distributor or wholesaler who purchases the products from the manufacturer pays the tax. Cigarettes are exempt from this tax. Instead, cigarettes are taxed at $2.70 per pack.
- Tobacco products are taxed at 30 percent of the wholesale price.
- Liquid nicotine is taxed at $0.10 per milliliter.
- Moist snuff incurs a tax of $0.75 per ounce.
- Container E-liquid is taxed on the retail sales price at the 10 percent rate.
Discretionary taxes (Local sales tax rates)
New Jersey does not have discretionary taxes for local jurisdictions other than what is listed above.
Registering for and filing New Jersey’s taxes
Business taxpayers can register to submit sales tax reports and remit payments by completing the Business Registration Application Form NJ-REG. Filers must register at least 15 business days before starting the business.
Filers also have the option of registering online through the Division of Revenue and Enterprise Services.
Due dates for New Jersey’s sales tax liabilities
Businesses required to file quarterly must pay their taxes no later than 11:59 p.m. on the 20th day of the month following the quarter. For example, if the business is filing taxes for the second quarter, which runs from April through June, the taxes are due on or before July 20.
You can also file early or even prepay taxes. The New Jersey Division of Taxation does not recommend waiting until the last day, as you may experience volume-related errors, which could cause your return to be late.
New Jersey sales tax holiday
New Jersey does not currently have a sales tax holiday.
New Jersey sales tax exemptions
New Jersey has several sales tax exemptions, including:
- Most food and drink items purchased in a supermarket, bakery, grocery store, produce market or similar establishment, as long as the food is not prepared.
- Food purchased through the Nutrition Assistance Program (SNAP).
- Food ingredients.
- Prescription drugs and over-the-counter medications.
- Diabetic supplies.
- Prosthetic devices.
- Durable medical equipment for use in the home.
- Mobility enhancing equipment when sold pursuant to a prescription.
Remote and marketplace sellers
Remote sellers and marketplace facilitators must collect New Jersey sales tax if they have over $100,000 in sales or 200 or more individual transactions. However, if they do not register for and collect sales taxes when they do not meet the thresholds, their buyers must pay the use tax and file a use tax return.
Most remote sellers and marketplace sellers collect New Jersey sales tax as a convenience to their buyers.
New Jersey’s sales and use tax rate is 6.625 percent.
New Jersey has several exemption certificates, including a resale certificate, exempt use certificate, the SSUTA exemption certificate, and exempt organization (for nonprofits and other exempt organizations) certificate.
It depends on the State’s laws. Many states have thresholds of $100,000 in gross sales per year or 200 individual transactions. Some states ignore the thresholds and require out-of-state businesses to collect taxes regardless of the thresholds. Check each State’s rules for collecting out-of-state taxes.
Yes. Once a business registers, it must file a return even if it did not collect sales tax or have use tax.