New Jersey's current sales tax rate

New Jersey charges 6.625% sales tax on most retail purchases. This rate has been in place since 2006 and applies statewide — there are no local add-ons or county variations like some other states have.

The 6.625% breaks down as 6% state tax plus 0.625% in dedicated sales tax revenue that funds specific programs. When you buy something at a store or online from a New Jersey seller, this single rate applies to your total.

Key Takeaways

  • New Jersey's sales tax rate is 6.625% and does not vary by county or municipality.
  • Groceries, prescription medications, and clothing under $110 per item are exempt from sales tax.
  • Services like haircuts, repairs, and professional fees are generally not subject to sales tax.
  • Online purchases from out-of-state sellers may not have sales tax added at checkout, but New Jersey residents are still responsible for reporting the tax owed.

What is and is not taxed in New Jersey

Not everything you buy is subject to the 6.625% rate. Groceries — food you prepare at home, including meat, produce, dairy, and bread — are completely exempt. Restaurant meals and prepared foods are taxed, but raw ingredients are not.

Prescription medications are also exempt. Over-the-counter drugs like pain relievers and cold medicine are taxed, but anything requiring a prescription slip is not. Clothing and footwear under $110 per item are exempt as well. A $100 pair of shoes is tax-free; a $150 jacket is taxed on the full amount.

Services are generally not taxed. A haircut, car repair, plumbing work, or medical appointment does not have sales tax added. However, if you buy a product as part of that service — like a bottle of shampoo at a salon or a replacement part at a repair shop — that product portion may be taxed.

Digital products and subscriptions (streaming services, software, e-books) are taxed in New Jersey, unlike some states. Utilities like electricity and natural gas are also taxed at a lower rate of 5.525%.

How sales tax works on online purchases

If you order from an online retailer based in New Jersey, sales tax is added at checkout. If you order from an out-of-state seller, tax may not appear on your receipt — but that does not mean you owe nothing.

New Jersey law requires residents to report and pay use tax on purchases made outside the state where sales tax was not charged. Use tax is the same rate as sales tax (6.625%) and covers the same items. In practice, most individual shoppers do not file separate use tax returns; it is tracked through income tax filings or reported on the annual New Jersey tax return if you itemize.

Large online retailers (Amazon, Walmart, Target, and others meeting New Jersey's threshold) now collect sales tax on orders shipped to New Jersey addresses, so you will see it added at checkout. Smaller sellers may not, and in those cases the use tax obligation falls to you.

Sales tax on specific categories

Some purchases fall into gray areas worth knowing about. Alcohol is taxed at the standard 6.625% rate when you buy beer, wine, or liquor at a store. Tobacco products are also taxed at the standard rate, plus New Jersey adds an excise tax on top (a separate per-unit tax that varies by product).

Motor vehicles are subject to sales tax, but the tax is calculated on the sale price and collected by the Motor Vehicle Commission when you register the vehicle, not at the dealership. Gasoline is taxed, but the tax is built into the per-gallon price you see at the pump.

Newspapers and magazines are exempt from sales tax. Candy and soda are taxed (they are not considered groceries). Diapers and feminine hygiene products are taxed at the standard rate.

Who collects and where the money goes

Retailers collect sales tax at the point of sale and send it to the New Jersey Division of Taxation. The state uses this revenue for general operations, but the 0.625% portion is dedicated to the Casino Revenue Fund (which supports Atlantic City casinos and senior and disabled resident programs) and the Homestead Property Tax Credit program.

If you are a business owner collecting sales tax, you file returns with the Division of Taxation monthly, quarterly, or annually depending on your sales volume. Consumers do not file separate sales tax returns unless they owe use tax on unreported out-of-state purchases.

Sales tax on services and labor

This is where confusion often arises. If you hire someone to perform a service — a plumber, electrician, accountant, or contractor — the labor itself is not taxed. However, if materials are included in the job, the retailer or contractor may charge sales tax on the materials portion.

For example: a plumber charges you $500 for labor and $200 for a new pipe. The $500 labor is not taxed, but the $200 in materials may be, depending on how the invoice is structured. Always ask your service provider to break down labor and materials separately so you understand what is being taxed.

Frequently Asked Questions

Do I pay sales tax on clothing in New Jersey?

Clothing and footwear under $110 per item are exempt. If a single item costs $110 or more, the entire purchase is taxed at 6.625%. This applies to each individual item, not your total purchase.

Is sales tax charged on groceries?

No. Raw food you prepare at home — produce, meat, dairy, bread, frozen vegetables — is exempt. Restaurant meals, prepared foods from a deli counter, and food you eat on premises are taxed.

What happens if I buy something online from out of state and no tax is charged?

You owe use tax at the same 6.625% rate. Most individual shoppers report this on their annual New Jersey tax return rather than filing a separate return. Large online retailers now collect the tax automatically for New Jersey orders.

Are prescription medications taxed?

No. Prescription drugs are exempt. Over-the-counter medications like aspirin or cough syrup are taxed at 6.625%.

Is sales tax added to utility bills?

Yes, but at a lower rate. Electricity, natural gas, and other utilities are taxed at 5.525%, not the standard 6.625%.