New Jersey: Sales Tax Handbook
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.
Contents1.) Taxability of Goods and Services
- General New Jersey taxability guidelines
- Are services subject to sales tax?
- Is shipping & handling subject to sales tax?
- Are drop shipped items taxable?
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.Top
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.Top
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.
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.
|Products on Amazon.com||TAXABLE *|
|General Clothing||EXEMPT *|
|Food and Meals|
|Leases and Rentals|
|Motor Vehicles||TAXABLE *|
|Tangible Media Property||TAXABLE|
|Manufacturing and Machinery|
|Raw Materials||EXEMPT *|
|Utilities & Fuel||TAXABLE|
|Medical Goods and Services|
|Newspapers and Magazines|
|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|
|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 *|
|General Trade-Ins||TAXABLE *|
|Vending Machine Sales|
* See notes in category taxability page for details
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