New Jersey Sales Tax Rates

Total Range for 2024

6.625%

new jersey division of taxation

Why do you need to collect sales tax in New Jersey?

There are two main reasons why a business might need to collect sales tax in New Jersey:

  1. Funding Essential Government Services: Sales tax is a major source of revenue for the state of New Jersey. This revenue helps fund critical services such as police and fire protection, road construction and maintenance, and public schools. By collecting sales tax, businesses with a sufficient connection (nexus) to New Jersey contribute to these essential services.
  2. Creating a Fair Playing Field for Businesses: Sales tax collection helps maintain a level playing field for businesses operating in New Jersey. Without it, out-of-state vendors could undercut in-state businesses by not collecting sales tax. Sales tax ensures that businesses selling similar goods or services in New Jersey contribute to the state’s tax base.

In addition, if you’re selling goods and services in New Jersey, to determine your obligation, you need to understand “nexus,” which ties businesses to states for tax purposes.

Two types of nexus exist:

  • Physical Nexus: Having a physical presence, like an office, warehouse, or employees in New Jersey, triggers this type. If you do, you likely need to collect sales tax.
  • Economic Nexus: This kicks in when your sales within New Jersey exceed a certain economic threshold. Even without a physical presence, surpassing this threshold requires collecting sales tax.

In New Jersey, the economic nexus threshold is based on either exceeding $100,000 in gross sales or having more than 200 separate transactions delivered to New Jersey customers within a calendar year.

By understanding these reasons and nexus rules, businesses can determine their responsibility to collect sales tax in New Jersey.

Is what you’re selling taxable in New Jersey?

The taxability of your product or service in New Jersey depends on its category. Here’s a breakdown for each:

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How to register for sales tax in New Jersey

If you’ve determined you need to collect sales tax in New Jersey, registering for a Sales Tax Certificate is the next step. Here’s how you can do it:

  1. Online Registration:
    1. The New Jersey Division of Revenue and Enterprise Services (DORES) recommends online registration through their Business Registration System. It’s generally faster and more convenient. Here’s what you’ll need:
      1. Business name and address
      2. Contact information
      3. Federal Employer Identification Number (EIN)
      4. Business activity start date
      5. Projected monthly sales and taxable sales
      6. Products or services offered
  2. Paper Application:
    1. If online registration isn’t an option, you can also apply for a Sales Tax Certificate by mail using a paper application (Form REG-1).
      1. Download the New Jersey Business Registration Application (Form REG-1) from the DORES website.
      2. Complete the form following the instructions provided.
      3. Mail the completed application form along with any required documentation to the address listed on the form.

Whichever method you choose, make sure to have all the necessary information readily available to ensure a smooth registration process.

  • Additional Notes:
    • You may be required to file a surety bond along with your application, depending on your business type and projected sales tax liability.
    • Once your application is approved, you’ll receive a Sales Tax Certificate with your registration number. You’ll need this number to collect and report sales tax.

For more detailed information and specific instructions, contact sales tax professionals like Yonda Tax or visit the New Jersey Division of Revenue and Enterprise Services website.

How to collect sales tax in New Jersey

Here’s how to collect sales tax in New Jersey:

  1. Determine the Sales Tax Rate:

The sales tax rate in New Jersey is a statewide flat rate of 6.625%.  However, some localities in New Jersey may have additional sales tax rates on top of the base rate.

You can find the specific sales tax rate for the location where your business is located or where you’re delivering goods/services by using the New Jersey Department of Taxation’s Sales Tax Rate Look Up tool.

  1. Apply the Right Sales Tax Rate:
  • Once you know the applicable tax rate, simply add it to the taxable sales price of your goods or services to determine the amount of sales tax to collect from the customer.
  • Example: If you sell a product for $100 in a location with a combined sales tax rate of 6.875% (6.625% base rate + 0.25% local rate), the sales tax amount would be $6.88 (100 x 6.875%). You would collect $106.88 ($100 + $6.88) from the customer.
  1. Keep Records of Sales Tax Collected:
  • It’s crucial to maintain accurate records of your sales and sales tax collected. These records are essential for filing sales tax returns and during any potential audits by the state.
  1. Report and Remit Sales Tax:
  • New Jersey businesses are required to file sales tax returns and remit the collected tax on a regular basis. The specific filing frequency depends on your business’s total sales tax liability.
  • Generally, businesses with lower sales tax liability will file quarterly, while those with higher liability may need to file monthly.

You can find detailed information on sales tax filing deadlines and remittance procedures on the New Jersey Division of Revenue and Enterprise Services website or by contacting them directly.

Additional Tips:

  • Consider hiring a sales tax wingman to take care of calculations, filing, and remittance, saving you time and ensuring accuracy.
  • Stay informed: Sales tax laws and regulations can change, so stay updated on any changes that might affect your business.

FAQs

How often do you need to file sales tax returns in New Jersey?

After your business has been registered to collect Sales Tax, you’ll need to submit quarterly returns and payments. Additionally, certain sellers may be obligated to make monthly payments. Monthly payments are necessary if:

  • Your sales and use tax collections in New Jersey exceeded $30,000 in the previous calendar year.
  • Your collections surpassed $500 in either the first or second month of the current calendar quarter.
Do you need a seller/reseller permit?

Yes, you will need a Sales Tax Certificate to collect sales tax in New Jersey.

When are New Jersey's Returns Due?

New Jersey sales tax returns are due by April 15th.

Are there any exceptions to the sales tax on digital products?

Yes, there are some exceptions.  For example, prewritten computer software delivered electronically is taxable, but digital newspapers and magazines are not.  It’s always best to consult the NJ Department of Taxation or a tax professional for specifics.

Contact Yonda Tax Today

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