New Jersey's sales tax rate and what it covers

New Jersey has a sales tax rate of 6.625%, which applies to most goods you buy in the state. This is one of the lower rates in the country. The tax is added to your purchase at checkout and goes to the state, not to individual cities or towns — New Jersey does not allow local sales taxes on top of the state rate.

Not everything you buy is taxed. Groceries, prescription medications, and most clothing items under $110 are exempt from sales tax. Restaurant meals, prepared foods, and non-prescription drugs are taxed. The line between what is and is not taxed can be confusing because it depends on how the item is classified and how it is sold, not just what it is.

Key Takeaways

  • New Jersey's sales tax is 6.625% and applies to most retail purchases, but groceries and prescription medications are exempt.
  • Clothing items under $110 per item are not taxed, but shoes and accessories are taxed regardless of price.
  • Restaurant meals and prepared foods are taxed, but raw groceries you cook at home are not.
  • Online purchases from out-of-state sellers may or may not be taxed depending on whether the seller has a physical presence in New Jersey.

What items are exempt from sales tax

Groceries are the biggest category of tax-free purchases in New Jersey. This includes bread, milk, vegetables, meat, and other food you take home to cook or eat raw. It does not include hot prepared foods, candy, soda, or items sold in a restaurant or deli counter.

Prescription medications are also exempt. Over-the-counter medicines like aspirin, cold medicine, and vitamins are taxed. Clothing and footwear have a partial exemption: individual clothing items under $110 are not taxed, but anything over that price is. Shoes and accessories like belts, hats, and gloves are taxed at the full rate no matter the price.

Medical equipment prescribed by a doctor — such as wheelchairs, crutches, or diabetic testing supplies — is exempt. Newspapers and magazines are not taxed. Gasoline and diesel fuel are taxed at a different rate (currently 10.5 cents per gallon as a separate excise tax, not the sales tax).

How sales tax is calculated at the register

When you buy a taxable item, the store calculates 6.625% of the price and adds it to your total. If you buy a $100 shirt, the tax is $6.63, making your total $106.63. If you buy multiple items, the store applies the tax to each taxable item separately, then adds them together.

Some stores round the total to the nearest cent. If your tax comes to $6.634, it rounds down to $6.63. If it comes to $6.635, it rounds up to $6.64. This rounding happens at the register, not on your receipt — you pay what the register shows.

Sales tax on online and mail orders

If you order from an online retailer that has a warehouse, office, or other physical location in New Jersey, sales tax is added to your order. If the seller has no physical presence in New Jersey, the store is not required to collect sales tax at checkout. However, New Jersey residents are technically responsible for paying "use tax" on those purchases when they file their state income tax return — though most people do not.

Large online retailers like Amazon, Walmart, and Target have distribution centers or offices in New Jersey, so they collect sales tax on orders shipped to New Jersey addresses. Smaller sellers may not, depending on their business structure. The tax is calculated based on your delivery address, not where the seller is located.

Who collects and where the money goes

Retailers collect sales tax from customers and send it to the New Jersey Division of Taxation. The state uses this revenue for general operations and services. Unlike some states, New Jersey does not split sales tax between the state and local governments — the entire 6.625% goes to the state level.

Businesses are required to register for a sales tax permit before they can legally sell taxable items. They must file sales tax returns monthly or quarterly, depending on their sales volume, and remit the tax they collected. If a business fails to collect or pay sales tax, it can face penalties and interest.

Sales tax on services

Most services in New Jersey are not subject to sales tax. Haircuts, car repairs, plumbing, legal information, and medical services are generally not taxed. However, some services are taxed: telecommunications services (phone, internet, cable) are subject to sales tax, as are certain repair and maintenance services on tangible personal property.

The distinction between a taxed and non-taxed service can be unclear. If you are unsure whether a particular service is taxed, you can contact the New Jersey Division of Taxation or ask the business directly — they are required to know the tax status of what they sell.

How to find the tax on a specific purchase

The easiest way to know if something is taxed is to ask the cashier or check the receipt after you buy it. If the item appears on your receipt with a tax amount next to it, it was taxed. If there is no tax listed, it was not.

If you are shopping online or want to know before you buy, look at the retailer's tax policy or contact them. You can also call the New Jersey Division of Taxation at 609-292-6400 with questions about specific items. They maintain detailed lists of what is and is not taxed, organized by category.

Frequently Asked Questions

Is clothing always tax-free in New Jersey?

No. Individual clothing items under $110 are tax-free, but anything over that price is taxed. Shoes, belts, hats, and other accessories are always taxed, regardless of price. The $110 threshold applies per item, not per transaction.

Do I pay sales tax on groceries?

Raw groceries you cook at home — like vegetables, meat, bread, and milk — are not taxed. Hot prepared foods, deli items, candy, soda, and anything sold ready-to-eat are taxed. The difference is whether you are buying ingredients or a finished meal.

Why is my online order taxed when I order from out of state?

If the seller has a warehouse, office, or other business location in New Jersey, they must collect sales tax on orders shipped to New Jersey addresses. Many large retailers have distribution centers in the state, which is why their online orders are taxed.

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

Use tax is a tax on purchases made outside New Jersey or from sellers with no New Jersey presence. Residents are technically responsible for reporting and paying it on their state income tax return. In practice, most individuals do not report use tax, though businesses are expected to.

Does New Jersey have local sales taxes on top of the state rate?

No. New Jersey does not allow cities or counties to add their own sales tax. The 6.625% state rate is the only sales tax you pay, no matter where in the state you shop.