New Jersey State sales tax

Find out interesting insights with John Silverstein, VP of FP&A , Extreme Reach

Moderated by Srishti, Financial Technology Advisor at Hyperbots

Don’t want to watch a video? Read the interview transcript below.

Srishti: Hello, everyone! My name is Rishi Rajvir, and I’m a Fintech advisor here at Hyperbots today. I’m delighted to have John Silverstein as my guest. Thank you so much, John, for taking out the time today for our viewers. John is the VP of FP&A at Extreme Reach, and today we will be discussing New Jersey State sales tax and use tax as well as how businesses can stay compliant with these evolving requirements. So shall we get started, John?

John Silverstein: Yeah, let’s get started.

Srishti: Perfect. To get started, can you give us an overview of New Jersey sales tax and use tax rules, particularly regarding which goods and services are taxable and which are exempt?

John Silverstein: Yeah. In New Jersey, most things, particularly tangible personal property, are subject to sales tax—electronics, clothing over $110, and furniture. Certain items are exempt, though, such as groceries, prescription drugs, and medical devices. Similar to other states, New Jersey also imposes a use tax on goods purchased outside the state that are brought back to New Jersey. Many services are exempt, but some, like repairs, maintenance, and certain professional services, can be taxable as well. For example, plumbing repair services are taxable, while labor on a new construction job is not.

Srishti: Understood. And how does New Jersey’s sales tax rate vary across different jurisdictions?

John Silverstein: New Jersey’s sales tax is currently 6.625% and is relatively uniform across the state. However, certain urban areas like Camden, Jersey City, and Newark apply additional local taxes in enterprise zones or specific regional tax incentives. These are typically capped at 6.625% for most purchases. In contrast, certain counties may implement tax exemptions for specific industries, like manufacturing or research, to encourage growth in those sectors.

Srishti: I see. That’s very interesting. Can you share your insights on how frequently these sales and use tax rates change? And what factors contribute to these changes?

John Silverstein: Sales tax rates in New Jersey have been generally stable over many years. They adjust them less frequently than other states, making it easier to keep up with changes. The last major change occurred in 2018 when the rate went up to 6.625%. Changes typically stem from state budget adjustments, legislative actions, or new programs and tax reforms. Additionally, use tax rates are often aligned with sales tax rates. Businesses must monitor rules around out-of-state purchases, which is a unique challenge in New Jersey. Changes can also arise from state agreements or court decisions, like the Wayfair ruling, which altered how remote sales are taxed.

Srishti: That definitely makes sense. On to the next question—what are some of the challenges businesses face in keeping up with New Jersey’s sales and use tax regulations?

John Silverstein: One of the main challenges in New Jersey is ensuring that they correctly apply the state’s sales and use tax to both in-state and out-of-state transactions. With the increased complexity of online sales and cross-border commerce—especially with New Jersey’s proximity to New York and Pennsylvania—it can get tricky. Businesses need to track which goods are taxable, which are exempt, and which require use tax reporting. Keeping up with exemptions for different industries, like manufacturing or nonprofits, or specific zones like urban enterprise zones, can create confusion. The digital landscape adds further complexity, as New Jersey also taxes digital products like software and cloud services.

Srishti: Understood. Where can companies find reliable, up-to-date information on New Jersey sales tax and use tax rates?

John Silverstein: The primary source is the New Jersey Division of Taxation website, which provides accurate and up-to-date sales tax and use tax information. It includes tax rate tables, guides, details on specific exemptions, and examples to help businesses. Third-party resources like Hyperbots, Avalara, and AvaTax also provide real-time updates by monitoring these sites for tax law changes. These tools help automate compliance processes and integrate into ERP systems, making it easier to stay updated and apply correct rates.

Srishti: That is really helpful. Can you share an example of how a business might use these resources to stay compliant with New Jersey sales tax and use tax rules?

John Silverstein: Sure. For instance, an e-commerce company selling products in New Jersey and other states can use Hyperbots or Avalara to automatically calculate the correct sales tax based on the customer’s location. If the customer is in New Jersey, the system applies the 6.625% sales tax rate. If the business ships the product to New Jersey from a neighboring state, it ensures the correct use tax is applied as well. These tools can also track specific tax exemptions, preventing mistakes like charging sales tax on groceries or prescription drugs.

Srishti: I see. Given your experience, how can AI help companies stay on top of sales tax and use tax changes in New Jersey?

John Silverstein: AI is incredibly helpful and already providing huge benefits. It applies sales and use tax rates accurately with tools like Hyperbots or Avalara. AI automatically monitors rate changes at state and local levels, flags new rules or modifications, and updates systems immediately. It checks tax authority updates and learns over time, improving its understanding of specific transactions. This reduces human error and ensures proper categorizations of taxable products.

Srishti: Perfect and for the last question, are there any specific AI tools or features you would recommend for managing sales tax and using tax compliance in New Jersey?

John Silverstein: I highly recommend tools like Hyperbots or Avalara. These integrate with ERP systems, ensuring compliance without the added cost of manual oversight. They provide real-time updates, automatic application of rates, and seamless integration into your ERP. AI tools with features like jurisdiction mapping, exemption handling, and automated tax calculation streamline compliance and ensure accuracy across transactions.

Srishti: That’s amazing. This has been really helpful. Thank you so much, John, for providing valuable insights on managing sales tax and use tax in New Jersey and the role AI is playing in simplifying compliance. And to our viewers, thank you for staying with us. That’s all we have for today. Thank you so much. Goodbye, and see you next time!

John Silverstein: Alright. Thank you.