In this article
- What’s taxable in New Jersey?
- What are non-taxable/exempt items in New Jersey?
- Do you have sales tax nexus in New Jersey?
- Sales tax rates in New Jersey
- How to calculate sales tax in New Jersey
- How does New Jersey sales tax work with marketplaces?
- Sales tax on shipping charges in New Jersey
- How to register for a New Jersey sales tax permit
- Sales tax guides for other states
Whether you’ve fully set up shop in New Jersey, or simply ship there once in a while, it’s important you know whether your business is liable to their sales taxes. In our 10+ years of experience helping online businesses comply with taxes, we’ve found that tax policies are confusing. So we've translated information from New Jersey's official sales tax resources into language that’s easy to understand.
This guide will tell you everything you need to know, plus direct you to the right places for handling any sales tax responsibility you may have.
What’s taxable in New Jersey?
In New Jersey, sales tax is levied on the sale of tangible goods and some services. The tax is collected by the seller and remitted to state tax authorities. Below is an overview of products and services that are generally taxable in New Jersey.
| Taxable Item | Description |
|---|---|
| Tangible personal property | These are physical items. |
| Certain services | Including information services and mailing services. |
| Leasing or renting tangible personal property | |
| Digital goods | Includes some “prewritten software delivered electronically.” |
To be absolutely clear about which products and services are subject to sales tax, and which are exempt, check the New Jersey Sales Tax Guide (SU-4).
What are non-taxable/exempt items in New Jersey?
New Jersey has a number of sales tax exemptions. Here are a few examples of non-taxable items that you don't need to charge NJ sales tax on:
- Food: Except candy, soft drinks, and prepared food.
- Most clothing and footwear.
- Newspapers and magazines.
- Over-the-counter and prescription drugs.
- Certain agricultural items.
- Software as a Service (SaaS): Unless SaaS meets the definition of an information service – see TB-72.
Sellers are required to collect a valid exemption or resale certificate from buyers to validate each exempt transaction.
Do you have sales tax nexus in New Jersey?
The word “nexus” refers to a commercial connection in the state. Nexus determines the following questions for a state tax agency: do you do business here, what kind, and how much? And when you do have nexus, that means you’re obligated to collect tax on your sales there. So the first question for you to answer is whether you have nexus in New Jersey.
New Jersey physical nexus
You probably have physical nexus in New Jersey if any of the following points describe your business:
| Nexus Type | Description |
|---|---|
| Physical location | Maintaining an office, distribution house, showroom, warehouse, service enterprise, or other place of business in New Jersey. |
| Employees | Having employees, independent contractors, agents, or other representatives working in New Jersey. |
| Trade shows | Attending conventions or trade shows in New Jersey. You may be liable for use tax on sales of products or services made during those events. |
| Click-through | If you have an agreement to reward someone in NJ for referring purchasers of goods through an internet link, website, etc., and sales from these referrals exceed $10,000 in the prior four quarters. |
New Jersey economic nexus
Remote sellers and marketplace facilitators that have a significant amount of economic activity in the state within twelve months. This is called an economic nexus, a sales tax nexus determined by economic activity, i.e. – the amount of sales you make in a particular state.
The threshold in New Jersey is gross revenue exceeding $100,000 or 200 or more separate transactions during the current or prior calendar year.
To learn more about how this works, check out Sales Tax Information for Remote Sellers.
Sales tax rates in New Jersey
The state-wide sales tax in New Jersey is 6.625%. New Jersey does not have local sales tax jurisdictions.
Check out Quaderno's Sales Tax Calculator to see your product’s tax rate, amount, and final price in New Jersey.
How to calculate sales tax in New Jersey
New Jersey has a destination-based sales tax, so you have to pay attention to the tax rate across the state. Charge the tax rate of the buyer’s address, as that’s the destination of your product or service. Add it to the price of your product, and collect the full payment.
How does New Jersey sales tax work with marketplaces?
Marketplace facilitators are responsible for collecting and remitting sales tax on behalf of marketplace sellers in New Jersey, regardless of whether the marketplace seller is above or below either of the economic thresholds. Remote sellers aren’t required to collect and remit sales tax on their marketplace sales of tangible personal property, specified digital products, or services delivered into New Jersey.
However, remote sellers that make sales through marketplaces and other channels may have a sales tax collection obligation for their non-marketplace sales.
See TB-83 Sales Through A Marketplace for more information.
Sales tax on shipping charges in New Jersey
New Jersey does apply sales tax to shipping costs. The rule of thumb is that if what you’re selling is subject to tax, then the shipping charges are also subject to tax. (And vice versa is true: If the item being shipped is not subject to sales tax, neither are the shipping charges.)
If you happen to be shipping products that are both taxable and nontaxable, then shipping charges for the entire shipment are subject to tax.
How to register for a New Jersey sales tax permit
Remote sellers can obtain a sales tax permit (or New Jersey Certificate of Authority) online, by registering as a vendor and first getting a New Jersey Business Registration Certificate. You can start by creatingan account with NJ’s Premiere Business Service, an online tax portal. (This portal is also where you’ll file and pay your tax returns. For information on how to file, check out this New Jersey sales tax filing guide.)
After you complete the online registration as a new business, the next step is to get a seller’s permit or New Jersey Certificate of Authority which allows you to charge and collect sales tax. This is a really simple process! But before you begin, have this information handy:
- Your Social Security number (if registering as a sole proprietor with no employees).
- Your Employer Identification Number (EIN).
- NJ business code, which you can find in this document.
- North American Industry Classification System number. Each number is a 2-6 digit code. Find yours in the NAICS directory.
Register for a NJ seller’s permit
- Go to the Online Business Registration site and click “Get Starter.”
- The next page asks about what kind of business you’re registering. If you don’t have any physical presence nexus in NJ, you need to select “Register as Remote Seller only.”
If you do have physical presence in NJ, even just storing inventory in a warehouse there, then you are not considered a remote seller and need to complete the Online Business Formation process.
- Then you’ll answer a few standard questions about your business, such as the day you’ll begin taxable sales in NJ and whether you plan to sell year-round.
- Next there’s a series of questions about your contact information and address.
- Finally, you’ll complete registration by agreeing to the terms and “signing” (typing) your name as the Authorized Representative.
After your application is reviewed and approved, you should receive a seller’s permit and registration certificate. You’ll also receive a security code in the mail that will enable you to create an online tax account.
The website doesn’t state how long you should expect to wait, but if you have any questions, you can contact the tax office through this support form.
When you receive your Business Registration Certificate, you should also receive an Authorization to Collect Sales Tax by mail. This will come with an assigned tax filing frequency: monthly or quarterly.
Create a Premiere Business Service account
- Go to the Premiere Business Service (PBS) website and click “New Users Only - Create an Account.”
- The process is really fast. You just need to provide contact information (and the myNewJersey credentials aren’t necessary).
- Complete the sign-up process and confirm your email address, if prompted.
Once registered, you’ll be assigned a tax filing frequency: monthly, quarterly, or yearly.
Sales tax guides for other states
Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the tax authorities.