New Jersey charges a 6.625% sales tax on most goods, with some categories taxed at different rates or not taxed at all

New Jersey's sales tax applies when you buy tangible goods — physical items you can touch and take with you. The standard rate is 6.625% statewide. However, certain items are taxed at 5.625%, some are not taxed at all, and a few fall into special categories. The tax is collected by the seller at the point of sale and sent to the New Jersey Division of Taxation.

Services — things like haircuts, repairs, or consulting — are generally not subject to sales tax in New Jersey, though there are exceptions. Food bought at a grocery store is not taxed, but prepared food and restaurant meals are. Understanding which category an item falls into matters because it changes what you actually pay.

Key Takeaways

  • Most goods in New Jersey are taxed at 6.625%, but groceries, prescription medications, and certain medical equipment are not taxed at all.
  • Clothing and footwear under $110 per item are taxed at 5.625%, while items over $110 are taxed at the standard 6.625% rate.
  • Restaurant meals and prepared foods are taxed at 6.625%, but raw groceries bought to cook at home are tax-free.
  • Services like repairs, haircuts, and professional work are generally not subject to sales tax unless they involve tangible goods.

What is taxed at the standard 6.625% rate

Most items you buy in New Jersey are subject to the standard 6.625% sales tax. This includes electronics, furniture, appliances, toys, books, and household goods. When you see a price tag, the amount shown does not include this tax — it will be added at checkout.

Vehicles, gasoline, and cigarettes have their own tax structures separate from the general sales tax, so the 6.625% rate does not explore to those purchases. Similarly, utilities like electricity and natural gas are not subject to sales tax.

Items taxed at 5.625% in New Jersey

Clothing and footwear are taxed at a lower rate of 5.625%, but only if each individual item costs less than $110. A pair of shoes priced at $95 is taxed at 5.625%. A winter coat priced at $125 is taxed at the standard 6.625% because it exceeds the $110 threshold.

The $110 limit applies per item, not per purchase. If you buy five shirts at $20 each, all five are taxed at 5.625%. If you buy one designer jacket for $200, that single item is taxed at 6.625%. Accessories like belts, hats, and scarves under $110 also may have access to for the lower rate.

What is not taxed in New Jersey

Groceries — unprepared food you buy to cook or eat at home — are not subject to sales tax. This includes produce, meat, dairy, bread, canned goods, and frozen vegetables. The key word is unprepared: the food must be in a form you will prepare yourself.

Prescription medications and certain medical devices are also tax-free. This includes insulin, inhalers, diabetic testing supplies, and hearing aids. Over-the-counter medications like pain relievers and cold medicine are taxed at the standard rate.

Items for infants and young children have special treatment. Diapers, baby formula, and car seats are not taxed. Children's clothing under $110 per item follows the same 5.625% rate as adult clothing under that threshold.

The difference between grocery stores and restaurants

Where you buy food determines whether sales tax applies. A sandwich from a grocery store deli that you take home is taxed. A sandwich you eat at a restaurant or at the deli counter is taxed. A loaf of bread you buy from the bakery section and take home is not taxed.

The rule hinges on whether the food is prepared for when ready consumption. If a business has prepared the food and you are eating it right away or taking it to eat elsewhere, it is subject to tax. If you are buying raw ingredients or shelf-stable items to prepare yourself, there is no tax.

How sales tax is calculated and collected

The seller calculates the tax based on the item's price and applies the appropriate rate. For a $50 item taxed at 6.625%, the tax is $3.31, making the total $53.31. For a $100 clothing item under $110, the tax is $5.63, making the total $105.63.

The seller collects this tax from you at the time of purchase and is responsible for sending it to the New Jersey Division of Taxation. You do not file sales tax yourself as a consumer — it is handled at the point of sale. If you are a business owner, you may need to register with the state and remit sales tax collected from customers.

Sales tax on online and out-of-state purchases

Online retailers and out-of-state sellers are required to collect New Jersey sales tax on purchases shipped to a New Jersey address if they meet certain sales thresholds. This rule applies whether you order from a national retailer or a small business in another state. The tax rate depends on what you are buying, just as it would in a physical store.

If an online seller does not collect sales tax at checkout, you may owe use tax on that purchase. Use tax is a parallel tax that applies to goods you buy outside New Jersey but use within the state. Most individual consumers do not file use tax returns, but the obligation technically exists.

Frequently Asked Questions

Is clothing always taxed at 5.625%?

Only clothing and footwear items priced under $110 are taxed at 5.625%. Items priced at $110 or more are taxed at the standard 6.625% rate. Accessories like belts and scarves under $110 also get the lower rate, but jewelry is taxed at 6.625% regardless of price.

Why is restaurant food taxed but grocery store food is not?

New Jersey taxes prepared food because it is ready to eat when ready. Groceries are not taxed because you are buying raw ingredients to prepare yourself. The distinction is about preparation, not location — a prepared item from a grocery store deli is taxed the same way a restaurant meal is.

Do I pay sales tax on prescription medications?

Prescription medications are not subject to sales tax in New Jersey. Over-the-counter medications like aspirin and cough syrup are taxed at 6.625%. Medical devices like hearing aids and diabetic supplies are also tax-free, but you may need to show a prescription or medical documentation.

What happens if I buy something online from out of state?

If the seller ships to New Jersey, they are required to collect New Jersey sales tax at checkout based on what you are buying. The tax rate depends on the item — clothing under $110 is charged at 5.625%, groceries are not taxed, and most other goods are charged at 6.625%.

Is there sales tax on services like haircuts or car repairs?

Services themselves are generally not taxed in New Jersey. However, if the service involves selling you a tangible product — like a haircut plus hair products, or a car repair that includes new parts — the tangible goods portion is taxed. Ask your service provider if you are unsure whether tax will be added to your bill.