New Jersey – NJ Sales Tax Calculator: User Guide

New Jersey is a state located in the northeastern region of the United States has almost 130 miles of Atlantic coast. The state offers peaceful living and easy commuting to New York City as well as natural beauty, outstanding food, lively locals, excellent educational institutes, and a good economy.

All these perks, along with a favorable business environment, and plenty of employment opportunities, forces thousands of people to move to the Garden State.

If you are mulling over to relocate, expand, or start your business in NJ State, it is essential to learn about the New Jersey Sales Tax. To help you with this, our experts have put together a great guide on New Jersey Sales Tax, which makes your business a lot easier. And once you are familiar with NJ Sales Tax calculation, you can always use our New Jersey Sales Tax Calculator to instantly calculate your sales tax.

New Jersey Sales Tax Facts

• The general sales tax rate collected by New Jersey on the state level is 6.625%. Fortunately, no county, city, or municipalities are allowed to collect local sales tax. The same sales tax rate would be applied regardless of the buyer's location within the state.
• All taxable goods and most services, including furniture, parking, digital property (e.g., electronically downloaded music, videos, software, etc.), electronics, fitness club memberships, and landscaping services, are subjected to NJ Sales Tax.
• New Jersey's Sales tax rate is lower than 55.8% of states in the US.
• There are two exceptions to above mention statewide sales tax rate. First is the New Jersey's state sales tax is Salem County, where almost all purchases are charged with a reduced sales tax rate of 3.3125%. However, items like cigarettes, services, alcoholic beverages, motor vehicles, and any transactions made outside the Salem county are not subjected to the reduced sales tax rate. The second exception is 37 New Jersey's "Urban Enterprise Zones," where a reduced sales tax rate of 3.3125% is charged on purchases made at qualified businesses.
• Over-the-counter drugs, prescription, Groceries, Gasoline, household paper products, and most types of clothing and footwear are exempted from New Jersey Sales Tax.
• Items purchased by Individuals and companies for resale, improvement, or raw materials can be exempted from NJ Sales Tax using New Jersey Sales Tax Exemption Form.
• Tangible Property purchased without paying NJ Sales Tax from the online or out-of-state seller for use in New Jersey is supposed to be subjected to New Jersey Use Tax of 6.625%.

How to calculate Sales Tax in New Jersey?

Businesses and Sellers who have Nexus are required to pay Sales tax to New Jersey on the retail sales of tangible personal property and taxable service. They must collect, manage, and transfer it to the New Jersey Division of Revenue and Enterprise Services while staying in compliance with state laws and avoid penalties and interest.

The sales tax determined on four factors:

1. Nexus: It is a connection of business with a state. The business is only liable to pay taxes to the states with Nexus.
2. Location and Products or Services: The sales tax rate varies from product to product and location to location. You must check the sales tax rate applicable to your product according to the product category, county, and city in New Jersey.
3. Exemptions: All tangible goods and certain services are eligible for sales tax regulation. However, Over-the-counter drugs, prescription, Groceries, Gasoline, household paper products, and most types of clothing and footwear are exempted from NJ Sales Tax. You should check with the New Jersey state government to update which goods and services sold in New Jersey are subject to sales tax.

To calculate Sales Tax in New Jersey, follow the steps below:

Step 1 – Determine your Nexus:

As a business owner, you are only required to collect sales tax if you are eligible for collecting sales tax and have Sales Tax Nexus in the New Jersey State. And to determine your Nexus in New Jersey, you must have any of the following:

• Having a place of business places like an office in the state.
• An employee or independent contractors or other representatives present in NJ.
• Ownership real or personal property in the state.
• Having inventory or goods stored in a warehouse in New Jersey.
• Merchandise delivered in New Jersey.
• Providing any maintenance program in the state.
• Making seasonal or occasional sales at events such as a flea market or craft shows.

Step 2 – Determine the Sales Tax Rate:

Once you have determined that your Nexus is with New Jersey, next is to deduce the Sales Tax rate (State + Local Sales Tax) applicable on your product, for which you can refer the tables below:

New Jersey Sales Tax Rates by Location:

As New Jersey only collects statewide sales tax and no other local sales tax, so tax charged would be 6.625%, regardless of location. However, there are the following two exceptions:

• New Jersey's state sales tax is Salem County, where almost all purchases are charged with a reduced sales tax rate of 3.3125%. However, items like cigarettes, services, alcoholic beverages, motor vehicles, and any transactions made from outside the Salem county are not subjected to the reduced sales tax rate.
• There are 37 New Jersey's "Urban Enterprise Zones," where also a reduced sales tax rate of 3.3125% is charged on purchases made at qualified businesses.

Step 4 – Calculate Sales Tax:

After determining the sales tax rate according to the location and type of purchases, it is easy to calculate the sales tax amount charged on the product and gross price (amount after tax) of a product.

Example # 1:

For instance, you are selling a Portable Speakers on your store in Golden Triangle, New Jersey, having a net price tag of $55. The amount that a buyer has to pay (including sales tax) on a check out would be:

Manual Method:

Net Price (amount before Tax) of a Portable Speakers: $15

Total Sales Tax rate: 0.00% (Golden Triangle) + 0.00% (Jackson County) + 6.625% (New Jersey State) = 6.625%

Total Sales Tax amount = $15 x 6.625% = $1

Gross Price (Amount after Tax) = 15 + 1 = $16

It means the buyer has to pay $16 for a Portable Speakers on a cash counter.

Using our Sales Tax Calculator:

All of the steps mentioned above can be skipped to get an instant result using our Sales Tax Calculator. All you need is:

1. Input the $15 Net Price of the Portable Speakers as Amount Before Tax
2. Input or select 625% of the combined Sales Tax rate on the Tax Rate menu.

Our calculator will automatically calculate the result, and represents it in 3 different forms, as shown in the image below:

Reverse Sales Tax Calculation

In the example above, we have explained to you to calculate the Sales Tax amount payable in a product, and the Gross Price of the Product.

But there are also instances when you are required to deduce how much sales tax buyer has actually paid on a product or you may want to check the accuracy of the sales tax indicated on your item's receipt.

This is where the Reverse Sales Tax Calculation Kicks in. And luckily, our New Jersey Sales Tax Calculator can perform this calculation like a Pro.

Example:

Your buyer has paid $75 for a Wireless Keyboard at your store in Glendora, New Jersey. Now the buyer is inquiring how much the Wireless Keyboard actually cost before the sales tax was added. So you need to follow the steps below to determine the amount before tax (net price) of a Wireless Keyboard:

Gross Price (Amount after Tax) of Wireless Keyboard: $75

Total Sales Tax rate: 0.00% (Glendora) + 0.00% (Camden County) + 6.625% (New Jersey State) = 6.625%.

Manual Method:

Gross Price with sales tax = [Net Price × (tax rate in decimal form + 1)]

20 = [Net Price x ((6.625/100) + 1)]

20 = Net Price x 1.07

$18.7 = Net Price

So the original Price (net price) of the Wireless Keyboard was $69.4.

Using our Sales Tax Calculator:

You can also use our Sales Tax Calculator for Reverse Sales Tax calculation to skip the aforementioned manual method. All you need is:

1. Input the $20 Gross Price of Wireless Keyboard as Amount after Tax
2. Input or select 6.625% of combined Sales Tax Rate on the Tax Rate

Our calculator will automatically calculate the result and represents it in 3 different forms.

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