New Jersey’s approach to sales tax generates necessary state revenue while treating customers and businesses equitably. The state has a uniform sales tax rate, which creates a simpler system than the varied local tax rates found in many other states. This makes compliance easier for businesses and provides predictable revenue streams for the state government. Sales tax applies to most tangible goods and specified services, with exemptions for items such as groceries, medications, and many household items, to lessen the burden on low-income individuals.

Below, we’ll break down how clothing is taxed in New Jersey and what businesses should know to stay compliant.

What’s in this article?

• What is the sales tax rate in New Jersey?
  
• Is there sales tax on clothing in New Jersey?
  
• Is there sales tax on laundry services in New Jersey?
  
• Sales tax refunds in New Jersey
  
• How to charge sales tax on clothing in New Jersey
  
• How to automate sales tax collection in New Jersey
  

What is the sales tax rate in New Jersey?

The current sales tax rate in New Jersey is 6.625%. There are no additional local sales taxes in the state.

Is there sales tax on clothing in New Jersey?

Generally, sales of clothing and footwear for human use are exempt from sales tax in New Jersey. But there are some exceptions based on the type of clothing or its intended use, including accessories, sports equipment, protective gear that’s not needed for work, and fur that makes up the majority of an item’s value. For a full list, check the New Jersey Division of Taxation’s official guide here.

Is there sales tax on laundry services in New Jersey?

New Jersey taxes laundry and dry cleaning services for hotel and restaurant linens, rugs, and curtains, but not for clothing. If an individual takes clothes to a launderette or dry cleaner to get them washed or cleaned, that person typically won’t have to pay sales tax for the service. Alterations and tailoring performed on clothes are also exempt from tax.

Sales tax refunds in New Jersey

In New Jersey, customers might be eligible for a sales tax refund if they were incorrectly charged sales tax on an exempt item or service or if they were overcharged on the tax amount. Per New Jersey law, to be eligible for a refund, you must have been taxed erroneously, illegally, or unconstitutionally.

If this occurs, you can request a refund from the seller for the easiest resolution process. If the seller doesn’t cooperate or if you paid the tax directly to the state, you can file a claim for a refund with the New Jersey Division of Taxation by filing Form A-3730 (Claim for Refund) within four years of the overpayment. Include all relevant documentation such as receipts and invoices.

You should keep up with changes in sales tax policies, as these might qualify you for a sales tax refund, if they’re not observed promptly by sellers.

How to charge sales tax on clothing in New Jersey

In New Jersey, most clothing and footwear are exempt from sales tax, but there are certain exceptions. If your business is selling taxable clothing items in New Jersey, you need to do the following:

• Register with the New Jersey Division of Taxation: Obtain a sales tax certificate and collect sales tax at the appropriate rate (currently 6.625%).

• Calculate the sales tax: Apply the sales tax rate to the taxable portion of the clothing item’s price.

• Collect the tax: Include the sales tax amount on the customer’s receipt and remit it to the state on your sales tax return.

Here’s a non-exhaustive list of taxable items.

Accessories

• Jewellery such as necklaces, earrings, bracelets, and rings

• Bags such as handbags, backpacks, and briefcases

• Non-prescription sunglasses

• Wallets and coin purses

• Belt buckles sold separately

Protective gear (unrelated to work):

• Helmets and hard hats

• Safety glasses and goggles

• Face masks and face shields

• Respirators for paint or dust

Sporting goods

• Athletic shoes such as cleats and spiked shoes

• Gloves for baseball and hockey

• Padding such as shin guards and shoulder pads

• Wet suits for surfing, diving, or other water sports

• Boots designed for skiing or snowboarding

Fur clothing

• Coats made entirely or partially of fur

• Hats made entirely or partially of fur

• Scarves, gloves, or other accessories made of fur

How to automate sales tax collection in New Jersey

Stripe Tax simplifies sales tax collection, calculation, and reporting, and can be a helpful solution for any businesses that need to collect and remit this tax. Here’s a closer look at how to automate sales tax collection in New Jersey using Stripe.

Sales tax registration

If your business has nexus (a sufficient presence) in New Jersey, you must register with the New Jersey Division of Taxation to obtain a sales tax permit. Stripe Tax can help you determine whether you’ve reached the economic nexus threshold.

Activating Stripe Tax

Go to the Tax section in the Stripe Dashboard to activate Stripe Tax and connect your New Jersey sales tax registration information. Specify the product categories you sell to ensure accurate tax calculation.

Automatic tax calculation and collection

Stripe Tax automatically calculates the correct sales tax rate (6.625% in New Jersey) for each transaction based on the customer’s location and the product or service sold. It adds the tax amount to the total cost at checkout and collects it from the customer.

Product taxability

Stripe Tax allows you to mark products as taxable or exempt based on New Jersey’s sales tax laws. For example, you can mark most clothing and footwear as exempt. You can also set up tax rules for specific product categories or shipping destinations.

Reporting and remittance

Stripe Tax generates detailed reports of collected sales tax, which help with filing and remitting taxes to the New Jersey Division of Taxation. You can export these reports or use Stripe’s integration with tax filing services for automatic filing. Determine your filing frequency (monthly, quarterly, or annually) based on your sales volume in New Jersey.