Welcome to 1StopVAT’s New Jersey sales tax (NJ) guide. By reading the information below, you will learn how much sales tax in New Jersey your company should pay and find out more about filing and remitting the tax. For the most recent tax information and individual consultations, reach out to the 1StopVAT team by clicking here
The sales tax New Jersey based businesses have to collect and pay is a tax, similar to VAT in Europe, charged at the time of purchase from the customer and then to the local tax authorities. In New Jersey sales tax is supervised by the New Jersey Division of Taxation – a part of NJ Treasury.
The obligation for a company to charge, collect and pay the sales tax for New Jersey emerges once the company establishes a nexus in the state. There are several types of New Jersey tax sales nexus, falling under the categories of physical and economic nexus.
Like in other states, both sales and use tax New Jersey apply. Seller and consumer use taxes are collected from sales tax-exempt businesses and consumers when no sales tax was applied upon the purchase.
When should you register to collect sales tax in New Jersey (NJ)?
Not only New Jersey-based businesses must collect the correct New Jersey sales tax rate
and report sales tax to the New Jersey Division of Taxation. The obligation to charge the sales tax emerges when the company forms a nexus in New Jersey, sells taxable goods and services to residents of the state, and the clients pay sales tax. Read further to learn what criteria constitute a sales tax nexus in New Jersey.
Find out if you have a nexus for collecting New Jersey sales and use tax
New Jersey sales tax nexus fall under two categories: physical and economic.
Your company is considered to have a physical nexus if you have an office or real estate, an employee or representatives, provide maintenance services, or store goods in New Jersey. Once such a nexus is established, you become obliged to collect and file the correct New Jersey sales tax percentage.
Economic nexus is generally applicable to remote sellers. Suppose you are a remote seller and sell your products to New Jersey residents. In that case, you must register for collecting the sales tax as soon as your gross revenue from sales of products or services into New Jersey exceeds $100,000 or 200 separate transactions in the last year.
Are you selling taxable goods and services?
Before figuring out what is the sales tax rate in New Jersey that you should charge from your customers, you should check if the goods and services that you sell are taxable.
Most goods for sale in New Jersey are taxable, with exceptions for unprepared food, clothes, and several other categories of items. When it comes to services, it is worth checking NJ Tax Treasury’s bulletin S&U-4 for a detailed list as some services such as communications are tax-exempt and others, like repairs or amusement activities, are taxed. For the taxed services statewide New Jersey sales tax rates apply.
New Jersey sales tax registration
New Jersey sales tax registrations are administered by the New Jersey Treasury’s Division of Taxation. Using their website, you can find the form (NJ-REG) for registering for sales tax alongside the e-file system. The website also announces the most recent information on the sales tax rate in New Jersey. If you prefer to register physically instead of signing up for New Jersey sales tax online, you can visit one of the NJ Treasury’s offices.
To determine what’s the sales tax in New Jersey that you should apply, you should consider if you are operating in Urban Enterprise Zone (UEZ) or regularly. The regular statewide sales tax rate New Jersey has enacted is 6.625%, while the UEZ businesses can use the reduced New Jersey state sales tax rate of 3.3125%.
After charging the correct sales tax rates New Jersey -based companies are responsible for filing the tax and sharing the information with New Jersey Treasury. Businesses in New Jersey can file the sales tax monthly or quarterly. Just like in many other states, sales tax returns and payments are due the 20th day of the month following each reporting period.