New Jersey Sales Tax Demystified

New Jersey Sales Tax Demystified

Sales Tax in New Jersey is pretty straightforward with the exception of a Watercraft sale.  Let’s get the ground work out of the way first then we will tackle the Watercraft Tax.

  • Tax Rates:
    • State Sales & Use Tax Rate is currently 6.875%.  This dropped from 7% on January 1st, 2017
    • Watercraft Sales get taxed at 50% of the State Sales & Use Tax Rate
    • Motor Vehicle Tire Fee is $1.50 per new tire sold
  • Shipping & Delivery:  If any items on the invoice are taxable then so are these charges
  • Jobs/Service Ticket Taxable Items:
    • Regular Jobs:
      • Labor
      • Shop Materials
      • EPA Charge
      • Pickup/Delivery
    • Extended Warranty/Service Contract Jobs:
      • The Deductible, if any, IS taxed.
  • Serialized Units Taxable Items:
    • Unit Price
    • Freight
    • Setup
    • PDI
    • Attached Accessories
    • Installation/Labor
    • Extended Warranty/Service Contract
    • Pre-Paid Maintenance Policy
    • Tire Wheel/Roadside Hazard Protection Policy
    • Theft Protection Policy
    • Key Replacement Policy
    • LoJack
    • Battery Tender
    • Battery Protection Policy
    • Chemicals (Interior Protectant, Paint Protectant, Undercoating)
    • DOC/Admin Fees
  • Trade-In Credit:  The buyer gets credit for ALL units being traded in even if there are more Trade-In units than the number of units they are purchasing
  • Watercraft Sales:
    • These get taxed at 50% of the State Sales & Use Tax Rate.
    • Note 1:  Watercraft ONLY get the discounted tax rate; the trailer it is sitting on (if one exists) does NOT!
    • Note 2:  Trade-Ins:  Due to the different tax rates involved, per the State of NJ, we must match up unit types for trade-in credit.  ie: Match up PWCs with PWCs and tax the difference using the Watercraft Tax and match up Trailers with Trailers and tax the difference at the full State Tax Rate.
    • Note 3:  The State REQUIRES dealers to track taxes on Watercraft sales which is why there is a separate Watercraft Tax in Lizzy.