New Jersey's standard sales tax rate is 6.625 percent

New Jersey charges 6.625 percent sales tax on most retail purchases. This is the statewide rate that applies when you buy taxable goods at a store, online, or by mail order. However, the actual tax you pay can be higher or lower depending on where in the state you make the purchase and what you are buying.

Some New Jersey counties add a local tax on top of the state rate. These county taxes range from 0.125 percent to 0.5625 percent, which means your total sales tax bill can be anywhere from 6.625 percent to 7.1875 percent depending on your location. The state collects the base 6.625 percent; the county portion goes to local government.

Sales tax in New Jersey is not the same as income tax. Income tax is what you pay on wages and investment earnings. Sales tax is what you pay when you spend money on goods. They are separate systems run by different parts of the state government.

Key Takeaways

  • New Jersey's base sales tax is 6.625 percent, but your actual rate depends on which county you live in or shop in.
  • County taxes add between 0.125 percent and 0.5625 percent on top of the state rate, bringing the total to as high as 7.1875 percent in some areas.
  • Most physical goods are taxable, but groceries, prescription medications, and clothing under $110 per item are exempt.
  • Online purchases from out-of-state sellers are subject to New Jersey sales tax if the seller has a physical presence in the state or meets certain sales thresholds.

County-by-county tax rates vary across the state

New Jersey divides sales tax collection into the state portion and the county portion. The state keeps 6.625 percent. Each of the 21 counties then adds its own local tax, which ranges from a low of 0.125 percent (in some areas) to a high of 0.5625 percent (in others). This means a purchase in one county can cost you more in tax than the same purchase in a neighboring county.

Bergen County, for example, has a combined rate of 7.0 percent (6.625 state plus 0.375 county). Essex County has 7.1875 percent (6.625 state plus 0.5625 county). Hudson County has 7.0 percent. If you shop near a county border, the location of the store matters for your tax bill, not where you live.

The New Jersey Division of Taxation publishes the exact rate for each county and municipality. If you need to know your specific rate, you can look it up by zip code on the state tax website or ask the retailer at checkout.

What is and is not taxed in New Jersey

Not everything you buy is subject to sales tax in New Jersey. Groceries — food you cook at home — are exempt. This includes bread, milk, vegetables, meat, and canned goods. However, prepared food, candy, soda, and hot food are taxed.

Prescription medications are not taxed. Over-the-counter drugs like pain relievers and cold medicine are taxed. Clothing and footwear under $110 per item are exempt from sales tax. A shirt that costs $80 is not taxed; a shirt that costs $150 is taxed on the full amount. This rule applies to each individual item, not your total purchase.

Most other goods are taxable: furniture, electronics, appliances, gasoline, restaurant meals, haircuts, and hotel stays. Services like plumbing, electrical work, and car repair are generally not taxed, but parts and materials used in those services may be.

How online and mail order purchases are taxed

If you order something online from a New Jersey retailer, you pay New Jersey sales tax. If you order from an out-of-state retailer, the rule depends on whether that retailer has what the law calls nexus in New Jersey — meaning a physical location, employees, or warehouse here, or enough sales volume to trigger the requirement.

As of 2018, federal law requires out-of-state sellers to collect sales tax if they sell more than $100,000 of goods into New Jersey in a year, or make more than 200 separate sales to New Jersey customers. Many large online retailers now collect New Jersey sales tax at checkout even though they have no physical store in the state. Smaller sellers may not.

If you buy from an out-of-state seller who does not collect New Jersey sales tax, you are technically responsible for paying use tax — which is the same rate as sales tax — when you file your state income tax return. In practice, most individual taxpayers do not report this, and the state does not pursue it for small purchases. But the obligation exists.

Who collects and where the money goes

The retailer collects sales tax from you at the point of sale and sends it to the New Jersey Division of Taxation. The state keeps the 6.625 percent portion. The county portion is then distributed to the county government where the sale took place. This is why sales tax is sometimes called a pass-through tax — the retailer passes the money from you to the government.

Retailers are required to register with the state and file sales tax returns, usually monthly or quarterly depending on their sales volume. If a retailer fails to collect or remit sales tax, the state can assess penalties and interest. As a customer, you are not responsible for tracking whether the retailer paid the tax — that is between the retailer and the state.

Sales tax versus income tax: how they work differently

New Jersey has both a sales tax and an income tax. They are separate systems. Sales tax is a tax on spending — you pay it when you buy something. Income tax is a tax on earning — you pay it on wages, self-employment income, investment gains, and other earnings. A person can owe both in the same year.

Sales tax is regressive, meaning it takes a larger percentage of income from lower-earning households than from higher-earning ones. A family earning $30,000 a year spends more of that on taxable goods than a family earning $150,000. Income tax is progressive, meaning higher earners pay a higher percentage. New Jersey uses both to fund state and local services.

When you file your income tax return, you do not deduct sales tax paid during the year. The two taxes do not offset each other. However, if you are self-employed or own a business, you can deduct sales tax you paid on business purchases and materials.

Special situations and exemptions

Certain organizations and purchases have exemptions from sales tax. Nonprofits registered with the state can buy goods without paying sales tax if the purchase is for the organization's charitable work. Resellers — businesses that buy goods to resell — do not pay sales tax on their purchases if they have a resale certificate. They collect tax from their customers instead.

Some items are exempt for public policy reasons. Newspapers and magazines are not taxed. Items for people with disabilities, like wheelchairs and hearing aids, are exempt. Certain energy sources used for heating or cooling a home have reduced or no tax in some cases.

If you believe a purchase should be exempt, ask the retailer or contact the New Jersey Division of Taxation. The state publishes detailed guidance on what qualifies for each exemption.

Frequently Asked Questions

Does New Jersey sales tax explore to online purchases from Amazon or other big retailers?

Yes. Amazon and most large online retailers collect New Jersey sales tax at checkout because they meet the sales threshold. The tax rate depends on which county the item is being shipped to. Smaller online sellers may not collect it, but you are technically responsible for paying use tax on your state income tax return if they do not.

Are groceries really not taxed in New Jersey?

Groceries for home cooking are not taxed — bread, milk, vegetables, meat, eggs, and canned goods are all exempt. But prepared foods, hot foods, candy, soda, and food you eat at a restaurant are taxed. The line is whether you are buying ingredients or a finished meal.

What happens if a clothing item costs exactly $110?

Items priced at $110 or less per item are exempt. An item priced at $110.01 is taxable. The exemption applies to each individual item, so if you buy five shirts at $100 each, none are taxed. If you buy one shirt at $150, the full $150 is taxed.

Can I deduct sales tax I paid during the year on my income tax return?

No. Sales tax and income tax are separate systems and do not offset each other. However, if you own a business or are self-employed, you can deduct sales tax you paid on business purchases and materials as a business expense.

Why is my sales tax different from the state rate of 6.625 percent?

Your county adds a local tax on top of the state rate. County taxes range from 0.125 percent to 0.5625 percent depending on where you live or shop. The total you pay is the state rate plus your county's rate. You can look up your exact rate by zip code on the New Jersey Division of Taxation website.