For those who operate in or do business in New Jersey, the sales tax in the state is relatively straightforward with a single flat rate for the entire state. While there are a handful of exemptions for physical goods and certain services are taxed, those with nexus or who operate solely in New Jersey have fewer hurdles than in some other states.
To ensure you have the information needed for acquiring a permit, collecting sales tax, and remitting payment to the State of New Jersey, we will discuss each aspect of the sales tax system in this state in the following guide.
The State of New Jersey has a flat sales tax rate of 6.625% with no local or municipal taxes. The state does not allow local municipalities to charge these taxes.
In New Jersey, there are 32 Urban Enterprise Zones designated by the state for sales tax relief. These economically depressed areas allow some physical goods to be exempted from sales tax. There are also options for some retailers who qualify to apply for a 50% sales tax reduction, allowing them to charge just 3.3125% instead of 6.625%.
In-state businesses are subject to collecting the 6.625% sales tax rate (unless the above exemptions apply). Out-of-state businesses should determine if they have sales tax nexus in New Jersey first, however. Nexus can be identified if any of the following situations is true of your business:
New Jersey has a Nexus questionnaire you can complete on their website that will help you determine if any of the above applies to you and if you need to acquire a permit. For those businesses that believe they do not have nexus, the state requires you to complete Form NJ-REG.
There are two fulfillment centers in New Jersey for Amazon FBA. If you participate in the Amazon FBA program and your inventory is stored in these warehouses, you may be considered to have nexus in New Jersey.
New Jersey has an economic nexus law similar to most other states requiring out-of-state sellers to register to collect and remit sales tax if they reach a threshold of $100,000 in sales or 200 or more separate transactions in the current or previous calendar year into New Jersey.
Sales tax applies to most tangible goods in New Jersey and few services, though there are exceptions to both of these provisions depending on the industry and situation. Here is a brief summary of what is taxable in the state:
It is recommended that you review the State of New Jersey’s guide to sales tax and exemptions to see what applies to your particular business situation.
Registration for a sales tax permit in New Jersey is required if you are considered to have nexus and must collect tax for sales made there. If you do not have nexus, you are expected to complete a form as well to prove to the state that you should not need to collect these sales taxes. Those who achieve economic nexus must register in the calendar year in which they reach the required threshold. You can register from the following two links:
There is no fee to file either of these in the State of New Jersey, and while the information required goes beyond a standalone sales tax permit, it allows businesses to register and acquire their permit together.
You will pay New Jersey sales and use tax by:
The frequency of your filing date will be determined when you receive your permit based on the estimated amount you will be collecting and remitting to the state.
Quarterly: All businesses with nexus or operations in New Jersey must remit payment quarterly unless certain circumstances require them to pay monthly (see below).
|January – March (Q1)||April 20|
|April – June (Q2)||July 20|
|July – September (Q3)||October 20|
|October – December (Q4)||January 20|
Monthly: Those businesses that collected more than $30,000 in sales and use tax in the previous calendar year will be required for the first or second month of the year if the amount collected is over $500.
The State of New Jersey charges a 5% late filing penalty for each month or part of a month if your return is late. There is a maximum penalty of 25%, and an additional $100 minimum penalty for each month your return is late (for zero returns or low volume returns where the percentage would be less than $100).
An additional late payment penalty of 5% may also be charged for those who remit payment late, and there is interest on all unpaid tax of 3% over the prime interest rate annually. This will be added to your balance due each month.
For those businesses that operate within the State of New Jersey and for those that do business in the state and believe they have nexus, you’ll need software that can help you calculate when and where to charge sales tax and how much the resulting collection should be. TaxTools offers a number of features such as data review, sorting, and more to help do this as efficiently as possible. To learn more about TaxTools and the time saving benefits it offers for sales tax collection, contact us today or signup for a free trial.
Last updated May 2022