New Jersey Sales Tax Exemptions / Tax Free Items New Jersey: Sales Tax Handbook

New Jersey:

What purchases are exempt from the New Jersey sales tax?

While the New Jersey sales tax of 7.00% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in New Jersey.

Sales Tax Exemptions in New Jersey

In New Jersey, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers.

Several examples of exemptions to the sales tax are most clothing items, prescription drugs, and jewelry.

Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for New Jersey:


Clothing

  EXEMPT

Groceries

  EXEMPT

Prepared Food

  7.%

Prescription Drugs

  EXEMPT

OTC Drugs

  7.%

These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.

Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":


Is candy taxable in New Jersey? Candy is NOT considered a grocery in New Jersey
Is soda taxable in New Jersey? Soda is NOT considered a grocery in New Jersey

Are services, shipping, installation, etc taxable in New Jersey?

The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the New Jersey sales tax see the New Jersey sales taxability FAQ page.


Other tax-exempt items in New Jersey

This table lists a number of additional categories of goods and services that are exempt from New Jersey's sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in New Jersey.

Category Exemption Status
Clothing
General Clothing EXEMPT *
Food and Meals
Grocery Food EXEMPT
Manufacturing and Machinery
Machinery EXEMPT
Raw Materials EXEMPT *
Medical Goods and Services
Medical Devices EXEMPT
Medical Services EXEMPT
Medicines EXEMPT
Newspapers and Magazines
Newspapers EXEMPT
Periodicals EXEMPT
Occasional Sales
General Occasional Sales EXEMPT
Optional Maintenance Contracts
Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts EXEMPT
Pollution Control Equipment
General Pollution Control Equipment EXEMPT
Services
Transportation Services EXEMPT *
Software and Digital Products
Custom Software - Delivered on Tangible Media EXEMPT *
Custom Software - Downloaded EXEMPT

* See notes in category taxability page for details



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Source: http://www.salestaxhandbook.com/new-jersey/sales-tax-exemptions