Sales tax in New Jersey is a 6.625% tax on most goods you buy, added at the register

New Jersey's sales tax rate is 6.625%, and it applies to the sale of tangible personal property — things you can touch and take home. When you buy a shirt, a phone, or a gallon of paint, the store adds 6.625% to the price before you pay. That money goes to the state, not to the store.

The tax is destination-based, meaning it depends on where the sale happens, not where the buyer lives. If you live in Pennsylvania but drive to New Jersey to shop, you pay New Jersey's rate. If a New Jersey resident buys something online from an out-of-state seller, New Jersey tax may or may not explore depending on whether that seller has a legal presence in the state — a rule that has shifted in recent years as online sales have grown.

Sales tax is separate from income tax. You pay income tax on what you earn; you pay sales tax on what you spend. A person might owe both in the same year, or one but not the other, depending on their income and purchases.

Key Takeaways

  • New Jersey's sales tax rate is 6.625% on most goods, but certain items like unprepared food, prescription drugs, and clothing under $110 are exempt.
  • Services — haircuts, repairs, consulting — are generally not subject to sales tax in New Jersey unless they are specifically listed in the tax code.
  • Online sellers must collect New Jersey sales tax if they have a physical or economic presence in the state, a rule that applies to most major retailers.
  • Restaurants and prepared food are taxed, but groceries and raw ingredients you cook at home are not.

What is and is not taxed

The 6.625% rate applies to most physical goods, but New Jersey has a long list of exemptions. Unprepared food — groceries, raw meat, vegetables, bread — is not taxed. Once food is prepared for when ready consumption, like a sandwich from a deli counter or a meal at a restaurant, it is taxed. The line matters: a rotisserie chicken from a grocery store deli is taxed; a raw chicken from the butcher counter is not.

Prescription drugs and medical devices are exempt. Over-the-counter medications like aspirin or cold medicine are taxed. Clothing and footwear under $110 per item are exempt; anything over that threshold is taxed. A $100 pair of shoes is tax-free; a $150 pair is taxed on the full amount.

Services are generally not taxed unless the law specifically says they are. A haircut, a car repair, a plumber's labor, accounting information — none of these are subject to sales tax. However, some services that blur the line between goods and services are taxed. For example, if a florist sells you an arrangement, that is taxed as a good; if they arrange flowers you already own, that service is not.

How the tax works at the register and online

When you buy something in a New Jersey store, the cashier or register calculates the tax on the subtotal and adds it to your bill. You see the breakdown: subtotal, tax, total. The store collects the tax and sends it to the New Jersey Division of Taxation, usually monthly or quarterly depending on the store's size and sales volume.

Online purchases are more complicated because the rule depends on whether the seller has nexus — a legal or economic connection to New Jersey. Large retailers like Amazon, Walmart, and Target have warehouses or operations in New Jersey, so they collect and send New Jersey tax on orders shipped to New Jersey addresses. A small online seller in another state may not have nexus and may not collect the tax, even though technically the buyer might owe it.

If you buy from an out-of-state seller who does not collect New Jersey tax, you are technically responsible for paying the tax yourself through a mechanism called use tax. In practice, most individual buyers do not report and pay use tax on small purchases. The rule exists mainly to prevent large retailers from gaining an unfair advantage over local stores.

Who collects and where the money goes

Retailers and online sellers are responsible for collecting sales tax from customers. They then file returns with the New Jersey Division of Taxation and send the money to the state. The Division of Taxation is part of the New Jersey Department of the Treasury and oversees all state tax collection and enforcement.

Sales tax revenue funds state programs and services. Unlike income tax, which is shared between federal and state governments, sales tax goes entirely to New Jersey. The state legislature decides how to allocate the money each year through the budget process. Some revenue is returned to municipalities to help fund local services.

Sales tax on specific categories

Understanding which categories are taxed helps you predict what you will pay. Groceries and food: unprepared food is exempt; prepared food and restaurant meals are taxed. Clothing: items under $110 are exempt; items $110 and over are taxed. Household goods: furniture, appliances, bedding are taxed. Electronics: phones, computers, televisions are taxed. Books and newspapers: printed books and newspapers are exempt; e-books and digital subscriptions are not taxed as sales tax items (they may be subject to other rules).

Motor vehicles are subject to sales tax, but the rate and rules differ from regular goods. Vehicle sales tax is 6.625%, but it is calculated on the sale price and collected by the Motor Vehicle Commission when you register the vehicle, not at the dealership. Trade-in value is deducted from the sale price before tax is calculated.

How sales tax differs from income tax and other taxes

Sales tax and income tax are two separate systems. Income tax is based on what you earn; sales tax is based on what you spend. A person with no income pays no income tax but still pays sales tax on purchases. A person with high income but few purchases pays high income tax but low sales tax.

Sales tax is also different from property tax, which is a local tax on real estate. Property tax is paid to your municipality; sales tax is paid to the state. A homeowner pays both property tax and sales tax, but they go to different governments and fund different services.

New Jersey also has an estate tax on inheritances above a certain threshold, and a corporation business tax on business income. These are separate from sales tax and explore to different situations.

Frequently Asked Questions

Do I pay sales tax on online orders shipped to New Jersey?

If the seller has a physical location or significant economic presence in New Jersey, yes — they collect and send the tax. Most large online retailers do. If the seller is a small out-of-state business with no New Jersey presence, they may not collect it, though you are technically responsible for paying use tax yourself.

Is clothing always exempt from sales tax?

No. Clothing and footwear under $110 per item are exempt. A $109 shirt is tax-free; a $110 shirt is taxed. Accessories like belts, hats, and gloves are taxed regardless of price.

Are restaurant meals taxed?

Yes. Any food prepared for when ready consumption, including restaurant meals, deli sandwiches, and takeout, is subject to the 6.625% sales tax. Unprepared groceries you cook at home are not taxed.

What is use tax and do I have to pay it?

Use tax is a tax on goods you buy from out-of-state sellers who do not collect New Jersey sales tax. You are technically responsible for reporting and paying it, but enforcement on individual purchases is minimal. It mainly applies to large purchases or business transactions.

Does sales tax explore to services like haircuts or car repairs?

No. Services are generally not subject to sales tax in New Jersey unless the law specifically lists them. A haircut, plumbing repair, or tax preparation are not taxed. However, if you buy a physical product as part of the service, that product may be taxed.