New Jersey Sales Tax on Services, Installation, etc New Jersey: Sales Tax Handbook

New Jersey:

What purchases are taxable in New Jersey?

The taxability of various transactions (like services and shipping) can vary from state to state, as do policies on subjects such as whether excise taxes or installation fees included in the purchase price are also subject sales tax. This reference is here to help answer your questions about what is and is not subject to the New Jersey sales tax.

Section 1: Taxability of Goods and Services

What transactions are generally subject to sales tax in New Jersey?

In the state of New Jersey, sales tax is legally required to be collected from all tangible, physical products being sold to a consumer. Some examples of items that exempt from New Jersey sales tax are clothing items, prescription drugs, and jewelry.

This means that an individual in the state of New Jersey who sells school supplies and books would be required to charge sales tax, but an individual who owns a store which sells jewelry is required to charge sales tax on all of its products.


Are services subject to sales tax in New Jersey?

In the state of New Jersey, services are not usually considered to be taxable. While most services are exempt from tax, there are a few exceptions. For example, a service which provides the buyer with any sort of access to information regarding things like stock quotes or marketing trends, it is very likely considered to be taxable, and thus you would most likely have to pay sales tax on the service.

You can find a table describing the taxability of common types of services later on this page.

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Are shipping & handling subject to sales tax in New Jersey?

In the state of New Jersey, the laws regarding tax on shipping and handling costs are relatively simple. Essentially, if the item being shipped is taxable, then the shipping charge is considered to be taxable as well. Any items being shipped that are not taxable, are not required to have their shipping charges taxed. If taxable and non-taxable items are being shipped together, then the shipping charges are required to be separated by weight, and only the taxable item's percentage of the shipping charge(determined by weight or sales price) is taxed.

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Are drop shipments subject to sales tax in New Jersey?

"Drop shipping" refers to the common business practice in which a vendor, often in a different state, makes a sale of a product which is shipped to the end-user by a third party supplier hired by the initial vendor. In New Jersey, drop shipments are generally subject to state sales taxes.

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Section 2: Taxability of Various Items in New Jersey

This table shows the taxability of various goods and services in New Jersey. If you are interested in the sales tax on vehicle sales, see the car sales tax page instead. Scroll to view the full table, and click any category for more details.

Category Exemption Status
Amazon Purchases
Products on Amazon.com TAXABLE *
Clothing
General Clothing EXEMPT *
Food and Meals
Catering TAXABLE *
Grocery Food EXEMPT
Leases and Rentals
Motor Vehicles TAXABLE *
Tangible Media Property TAXABLE
Manufacturing and Machinery
Machinery EXEMPT
Raw Materials EXEMPT *
Utilities & Fuel TAXABLE
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
Motor Vehicles TAXABLE *
Optional Maintenance Contracts
General Optional Maintenance Contracts TAXABLE
Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts EXEMPT
Pollution Control Equipment
General Pollution Control Equipment EXEMPT
Services
Janitorial Services TAXABLE
Transportation Services EXEMPT *
Software and Digital Products
Canned Software - Delivered on Tangible Media TAXABLE
Canned Software - Downloaded TAXABLE *
Custom Software - Delivered on Tangible Media EXEMPT *
Custom Software - Downloaded EXEMPT
Customization of Canned Software TAXABLE *
Digital Products TAXABLE *
Trade-Ins
General Trade-Ins TAXABLE *
Vending Machine Sales
Food TAXABLE *
Merchandise TAXABLE *

* See notes in category taxability page for details



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** This Document Provided By SalesTaxHandbook **
Source: http://www.salestaxhandbook.com/new-jersey/sales-tax-taxability