New Jersey sales tax is charged at a rate of 7%. This rate has come into effect from 15th July 2006. Previously, the rate was 6%. This percentage of sales tax is divided into two equal portions. 3.5% is payable to the state of New Jersey and the remaining 3.5% is paid to the municipality. In order to promote economic development, the portion of the sales tax that is payable to the state is exempted in the Urban Enterprise Zones. The New Jersey sales tax 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
There are provisions for sales tax exemptions in New Jersey. The following are the products on which sales tax in New Jersey is not charged:
- Unprepared Food
- Machine
- 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)
- Medicines
- Footwear
The New Jersey Legislature on the 1st of March 2000 created the Sales and Use Tax Review Commission. This Commission is entrusted with the power to evaluate and report on the various proposed legislations on the laws concerning sales and use taxes. Legislations usually involve increase or decrease in exemptions of sales tax of New Jersey. The commission looks into the fact that the burden of NJ sales tax is shared in an equal and fair basis. Both horizontal and vertical equity should be maintained according to the commission. The commission also ensures a taxation system based on neutrality, simplicity and cost efficiency.
Reality Transfer Fee is the name given to the New Jersey Home Sales Tax. The sellers of homes pay this tax as a certain percentage of the selling prices of their houses. This fee was introduced in 1968. New Jersey sales tax is payable over the phone or online by filing form number ST - 50/51. The NJ Sales and Use Tax EZ File Systems are to be used. Anyone having bank accounts can pay sales tax by electronic checks or credit cards.