Food is a tricky category when it comes to sales tax, and states approach it in a variety of different ways. One of the things that makes it challenging is that it’s typically not viewed as a single category at all, but treated differently depending on whether it’s been prepared or packaged, for instance. We’ll walk you through when – and when not to – charge sales tax when selling food and beverages in New Jersey.
Are groceries taxable in New Jersey?
Good news! Grocery items are sales tax exempt in New Jersey.
Are meals taxable in New Jersey?
Prepared food is taxable. “Receipts from the sale of prepared food in or by restaurants, taverns, or other establishments in the state, or by caterers, including in the amount of such receipts any cover, minimum, entertainment or other charge made to patrons or customers are subject to tax.”
Are beverages taxable in New Jersey?
Soft drinks are defined in New Jersey as nonalcoholic beverages in liquid form that contain natural or artificial sweeteners. These are taxable in New Jersey. Beverages that contain milk or milk products; soy, rice, or similar milk substitutes; or more than 50% fruit or vegetable juice are not considered “soft drinks” and are not subject to sales tax.
How to Always Collect the Correct Amount of Sales Tax in New Jersey
Do you sell groceries, meals or beverages? Are you required to collect sales tax in New Jersey? Then this all might seem overwhelming to figure out and manage.
That’s where TaxJar can help.
With the TaxJar API, you can be sure you’re collecting the right amount of sales tax on every transaction. Our product tax codes ensure you do collect sales tax on that soft drink but don’t collect sales tax on that plain coffee drink.
Not to mention, most eCommerce businesses have nexus in multiple states. For example, groceries are taxable in some states, but non-taxable in others. Or, like Illinois, they are taxable at a reduced rate. With TaxJar, you’ll collect the right amount of sales tax from every customer, in every state, every time.
Further food and meal taxability resources:
- Sales Tax by State: Are grocery items taxable?
- Sales Tax by State: To-Go Restaurant Orders
- Is the food I sell on my food truck taxable?
- New Jersey Sales Tax Guide for Businesses
Ready to automate sales tax collection, reporting and filing? Click here for more on how TaxJar can take the headache out of sales tax in your food & beverage business.