New Jersey ‘Use Tax’

Many people here don’t know that New Jersey has a Use Tax.

Use Tax is owed by New Jersey residents and businesses that buy products out of state, online, or via the mail, and then bring the products to New Jersey or have them shipped here.

The Use Tax is the same 6.625% as the sales tax¹, just calculated on transactions that were not subject to sales tax.

The Use Tax is calculated and paid along with the annual tax return.

If you don’t have records of your purchases, you can rely on the state’s average use tax amounts based on your income.

For an average taxpayer, the Use Tax is about $100.

“Chapter 10 Field Audit Procedures – Sales and Use Tax includes” instructions for Revenue Agents who conduct an audit of a resident business. (It pays to know in advance what they will be looking for).

¹ The tax rate has declined gradually in recent years. This is the rate for 2019 and 2020.