In most states, clothing is generally considered tangible personal property and subject to sales tax. But a few US states consider clothing tax exempt, and New Jersey is one of them.
This post will cover what eCommerce businesses required to collect sales tax in New Jersey need to know about selling clothes in the Garden State.
When is clothing tax exempt in New Jersey?
Sales of articles of clothing or footwear for human use are generally tax exempt in New Jersey.
Common tax exempt clothing in New Jersey includes:
- Footwear, inner and outer wear
- Baby accessories such as diapers
- Protective equipment required for a workers’s daily use, such as breathing masks or hard hats
- Sewing equipment used directly in making clothing, such as fabric, elastic or thread
New Jersey provides a long list of tax exempt clothing and footwear here, starting on p. 20.
When should businesses charge New Jersey sales tax on clothing?
While most inner and outerwear (from t-shirts to coats) is tax exempt in New Jersey, the state makes plenty of exceptions.
Clothing that is taxable in New Jersey includes:
- Clothing made of fur
- Clothing worn exclusively for participation in a sport (i.e. a uniform.) However, clothing that can be used for a sport but adapted for other use (such as basketball shorts not bought as part of a uniform, are tax exempt)
- Protective equipment not used on the job – i.e. helmets or goggles used in recreation
- Accessories such as backpacks or jewelry
- Sewing accessories like needles or scissors – while they are used to make clothing, they are not part of the final product
You can read more about what items are and are not taxable in New Jersey in the New Jersey Sales Tax Guide.
How to Automate New Jersey Sales Tax Collection
Do you sell clothing in New Jersey? If you do, the state’s inconsistent rules about what is and what is not taxable can be a huge headache. If you accidentally collect sales tax on a product that isn’t taxable, you create a negative customer experience. No one wants your customer to back out of their shopping cart in favor of a competitor who gets tax right.
But if you don’t collect sales tax on a product that was actually taxable, you end up owing that sales tax out of pocket when it comes time to file your sales tax returns with the state.
That’s why TaxJar has your back. With the TaxJar API, you can be sure you’re collecting the right amount of sales tax. Our product tax codes ensure you collect sales tax on that taxable prom dress you ship to New Jersey, but don’t collect sales tax on the non-taxable printed T-shirts included in the same shipment.
Further, most eCommerce businesses have nexus in multiple states. For example, clothing priced under $110 is non-taxable at the state level in New York, while clothing is generally taxable in a majority of US states. With TaxJar, you’ll collect the right amount of sales tax from every customer, in every state, every time.
Ready to automate sales tax collecting, reporting and filing? To learn more about TaxJar and get started, visit TaxJar.com/how-it-works.