New Jersey Sales Tax

The New Jersey sales tax rate increase, from 6% to 7 %, came into effect on July 15, 2006. This percentage of sales tax is divided into two equal portions- 3.5% is payable to the state and the remaining 3.5% is paid to the municipality. In order to promote economic development, the portion of sales tax payable to the state is exempted in the urban enterprise zones, so the rate then becomes 3.5%.

Some of the places that fall within the urban enterprise zones are as follows:

• Phillipsburg
• Camden
• Gloucester City
• Mount Holly
• Lakewood
• Passaic

The following are the products on which sales tax is not charged:

• Unprepared Food
• Machines
• Household paper products
• Clothing (6% Fur Clothing Gross Receipts Tax is charged on sale of clothing and related accessories made out of fur from the felt or hide of an animal)
• Gasoline ($0.145 per gallon excise tax is charged)
• Medicine
• Footwear

On March 1, 2000, the New Jersey Legislature created the Sales and Use Tax Review Commission. As legislation usually involves an increase or decrease in exemptions of sales tax, the commission is entrusted with the power to evaluate, and report on, various proposals on laws concerning sales and use taxes.
It ensures that, the burden of sales tax is shared in an equal and fair basis, both horizontal and vertical equity is maintained accordingly, and that the taxation system based on neutrality, simplicity, and cost efficiency.