New Jersey's sales tax rate and what it covers

New Jersey charges a 6.625% sales tax on most retail purchases. This is the statewide rate that applies when you buy taxable goods at a store, online, or through mail order. The rate is uniform across all counties — there are no local add-ons like you see in some states.

Not everything you buy is taxed. Groceries (unprepared food you cook at home), prescription medications, and medical devices are exempt. Clothing and footwear under $110 per item are also exempt — if a shirt costs $109.99, no tax; if it costs $110.01, you pay tax on the full amount. Prepared food, restaurant meals, and takeout are taxable.

Services are generally not taxed in New Jersey, with a few exceptions. Haircuts, dry cleaning, and car repairs are not taxed. But telecommunications services (your phone bill) and utilities like electricity and natural gas are taxed at a lower rate of 4%.

Key Takeaways

  • New Jersey's statewide sales tax is 6.625% with no additional local taxes added on top.
  • Groceries, prescription drugs, and clothing under $110 per item are not subject to sales tax.
  • Restaurant meals, prepared food, and takeout are taxable at the full 6.625% rate.
  • Utilities and phone bills are taxed at 4%, which is lower than the standard sales tax rate.
  • Online purchases from out-of-state sellers are subject to New Jersey sales tax if the seller has a physical presence in the state.

How sales tax is collected and paid

When you make a purchase at a store, the cashier adds the sales tax to your total at checkout. The store collects this money and sends it to the New Jersey Division of Taxation on a monthly or quarterly basis, depending on the store's sales volume. You do not file anything yourself as a consumer — the business handles the entire process.

Online purchases work the same way. If you buy from a retailer that has a warehouse, office, or other physical location in New Jersey, they must collect and remit sales tax. If you buy from an out-of-state seller with no New Jersey presence, they typically do not collect tax at checkout, but New Jersey residents are technically responsible for paying "use tax" on those purchases when they file their state income tax return. In practice, most people do not report this, and enforcement is limited.

Exemptions beyond groceries and clothing

Several categories of purchases are fully exempt from sales tax in New Jersey. Newspapers and magazines are not taxed. Items purchased for resale by a business are not taxed if the business provides a resale certificate. Certain medical equipment — including wheelchairs, canes, and oxygen equipment — is exempt.

Agricultural equipment and seeds used by farmers are exempt. Items purchased by nonprofit organizations for charitable purposes may be exempt if the organization is registered with the state. If you are unsure whether a specific item is taxable, the Division of Taxation publishes a detailed list on its website, or you can contact the agency directly.

The $110 clothing threshold explained

New Jersey's clothing exemption applies to individual items under $110. This means a pair of jeans priced at $109 is not taxed, but a pair priced at $110 or more is fully taxable. The threshold applies per item, not per purchase — if you buy five $20 shirts, none are taxed; if you buy one $150 coat, the entire $150 is taxed.

The exemption covers clothing and footwear intended to be worn on the body. It does not cover accessories like hats, gloves, belts, or jewelry, which are always taxed regardless of price. Protective equipment like work boots or safety goggles may fall into a gray area — when in doubt, ask the retailer or check the Division of Taxation's guidance.

Utilities and telecommunications at the lower rate

Electricity, natural gas, and water are taxed at 4% instead of 6.625%. This lower rate applies to residential and business customers. Your utility bill will show the 4% tax separately from the base charge.

Telephone service — both landline and mobile — is also taxed at 4%. Internet service provided by a telecommunications company is taxed at 4%, but internet service provided by a cable company may be taxed differently. If your bill combines services (for example, a bundle of phone, internet, and cable), each component may be taxed at its own rate. Your bill should itemize these separately.

Restaurant meals and prepared food

Any food prepared for when ready consumption is taxable at the full 6.625% rate. This includes restaurant meals, takeout from a deli, hot food from a grocery store salad bar, and coffee from a café. The distinction is whether the food is ready to eat when you buy it.

Unprepared groceries — raw ingredients you take home and cook — are not taxed. A rotisserie chicken from the supermarket is taxable because it is prepared. A raw chicken breast is not taxed. A sandwich made to order is taxable. A loaf of bread you buy from the bakery section is not taxed. When the line is unclear, the rule is: if it requires no further preparation, it is taxable.

What happens if you buy from out-of-state online sellers

Large online retailers like Amazon, Walmart, and Target collect New Jersey sales tax on purchases shipped to New Jersey addresses, even though the company is based elsewhere. They do this because they have warehouses or distribution centers in the state, which makes them subject to New Jersey tax law.

Smaller online sellers without a New Jersey physical presence are not required to collect sales tax at checkout. Technically, you owe use tax on these purchases, but it is rarely enforced for individual consumers. If you want to report it, you can add the total to your state income tax return, though most people do not.

Frequently Asked Questions

Do I pay sales tax on groceries?

No. Unprepared food — items you buy to cook at home — is not taxed. This includes meat, produce, bread, milk, and canned goods. Prepared foods like rotisserie chicken, deli sandwiches, and hot pizza are taxed at 6.625%.

Is clothing always exempt from sales tax?

Clothing and footwear under $110 per item are exempt. Items priced at $110 or more are fully taxable. Accessories like belts, hats, and jewelry are always taxed, regardless of price.

What is the difference between sales tax and use tax?

Sales tax is collected by the seller at the point of purchase. Use tax is a tax on items you buy from out-of-state sellers who do not collect sales tax. You are responsible for reporting use tax on your income tax return, though enforcement is limited for individual consumers.

Why is my utility bill taxed at 4% instead of 6.625%?

New Jersey taxes electricity, natural gas, water, and telecommunications at a lower rate of 4%. This applies to both residential and business accounts. The lower rate has been in place for many years and applies statewide.

Do I have to pay sales tax on online purchases?

If the online seller has a physical presence in New Jersey (a warehouse, office, or distribution center), they must collect and remit sales tax. If they do not, you technically owe use tax, but it is rarely enforced for individual purchases.