New Jersey Sales Tax
New Jersey Sales Tax At a Glance
State rate: 6.875%Maximum combined rate: 6.875%
Sourcing: Destination
Tax Holidays: None
Governing Body: New Jersey Division of Taxation
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.
New Jersey Sales Tax Rates
The State of New Jersey has a flat sales tax rate of 6.875% 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 3.5% instead of 6.875%.
Determining Sales Tax Nexus in New Jersey
In-state businesses are subject to collecting the 6.875% 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:
- Any physical or tangible goods are stored in a warehouse in the state
- If you have any independent contractors, representatives or employees in the state
- If you have an office or other place of business located in the state
- If you deliver merchandise to individuals in New Jersey
- If you provide a maintenance program to anyone located in New Jersey
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.
What Is Eligible for Sales Tax in 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:
- Physical Goods – Almost all physical goods are subject to sales tax in New Jersey with a handful of exceptions depending on the type of good being sold.
- Exemptions from Sales Tax – Food and food ingredients, dietary supplements, certain non-sugary beverages, prescription drugs and over the counter drugs, and medical equipment are all exempt from sales tax. A number of goods that might be in this category may have sales tax applicable, however, so it is recommended that you review the full list of taxable and exempt goods in New Jersey’s Bulletin S&U-4.
- Certain Digital Goods – New Jersey added digital goods to its list of taxable goods in 2006. Digital property in New Jersey refers to electronically delivered versions of physical goods such as movies, books, video, audio, music, magazines, and periodicals.
- Services – Sales tax on services is severely limited in New Jersey, though it does apply to a number of service categories. Laundering and dry cleaning on non-clothing items is taxable, as is floor covering and installation services and landscaping services. Additionally, services that provide information on stock quotes or marketing trends are taxable as well.
- Bringing Items in from Outside the State – If you purchase an item from outside the state of of New Jersey and bring it into the state you may be responsible for paying sales tax on that item directly if it was not collected by the merchant.
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
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. You can register from the following two links:
- Register online from the Business Formation page.
- Complete the NJ-REG form, although this no longer seems to be available on their website
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.
Filing
You will pay New Jersey sales and use tax by:
- For Those in State – New Jersey doesn’t allow local sales taxes, so there are few exceptions or changes you’ll need to make if you operate solely in state. However, keep in mind that some sales in the 32 Urban Enterprise Zones may be affected and that some sales in Salem County may be affected by the 3.5% reduction in sales tax.
- Out of State Sellers – For those out of state, you will need to establish nexus and then determine if any of your sales are affected by the above adjustments to sales tax in the state. The filing requirements are then the same.
- Shipping Charges – Shipping on all taxable items is taxable. However, if shipping is combined for both taxable and non-taxable items, the taxation on shipping can be split as well.
- Filing Your Return – New Jersey’s Division of Taxation has an online portal through which sales tax can be paid. The state requires all sales and use tax to be paid online through their electronic portal, though you can obtain Form ST-50 or ST-51 for review.
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.
Deadlines
Quarterly: All businesses with nexus or operations in New Jersey must remit payment quarterly unless certain circumstances require them to pay monthly (see below).
| Period | Due Date |
|---|---|
| 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.
| Period | Due Date |
|---|---|
| January | February 20 |
| February | March 20 |
| March | April 20 |
| April | May 20 |
| May | June 20 |
| June | July 20 |
| July | August 20 |
| August | September 20 |
| September | October 20 |
| October | November 20 |
| November | December 20 |
| December | January 20 |
Penalties and Interest for Late Payments
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.
Resources:
- New Jersey Sales Tax Guide
- State of New Jersey Division of Taxation Sales and Use Tax homepage
- Online Portal for Paying Sales and Use Tax
- State of New Jersey Nexus Questionnaire
New Jersey Sales Tax Software
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.