Retailers are reminded that the state’s 10-day sales tax holiday, which temporarily exempts certain computers, school supplies, and sport or recreational equipment sold to individuals from New Jersey’s 6.625% sales tax, starts Saturday, Aug. 27 and runs through Labor Day.
The State Division of Taxation has posted online FAQs to clarify which types of back-to-school items are exempt, whether there is a limit to the number of exempt items a customer can buy, how to handle rainchecks, exchanges and returns of tax-exempt items, and more.
Eligible items include computers with a sales price of less than $3,000, school art supplies, school instructional materials such as textbooks and reference books, school supplies, and sports and recreational equipment for non-business use. A list of all tax-exempt items can be found online here.
Key facts for retailers to know:
- Purchasers do not need to provide the seller with a tax-exemption certificate in order to be exempt from the sales tax on any eligible items they buy Aug. 27 through Sept. 5.
- There is no limit on the number of tax-exempt items that a customer can buy.
- Sellers may offer store discounts and/or coupons to reduce the sales price of computers with a sales price of $3,000 or greater so that items qualify for the sales tax holiday. However, a price reduction that is the result of a manufacturer’s coupon and/or rebate does not qualify an item to be eligible for the exemption.
- Computers that cost more than $3,000 are fully taxable – no sales tax exemption may be applied toward the first $3,000 of the purchase price.
- Items purchased using a rain check are eligible for the exemption only if the rain check is redeemed during the Aug. 27 – Sept. 5 exemption period. If it is redeemed after Sept. 5, the purchase is taxable.
- If a customer buys an eligible item during the sales tax holiday and later exchanges it for the same item in a different size or color, the seller should not charge New Jersey sales tax even if the exchange is made after Sept. 5. However, if the customer returns an item for a credit toward a different item after Sept. 5, the item is taxable.
- If a customer buys an item before Aug. 27 and returns that item during the exemption period for a credit on the purchase of a different eligible item, no sales tax is due on the sale of the new item. The seller must also credit the customer for the sales tax paid on the item being returned.
- Shipping and delivery charges for eligible items are not taxable during the sales tax holiday. If a shipment includes eligible items and taxable items, the seller must charge tax on the portion of the delivery charges allocated to the taxable items in the shipment.
More information can be found on the New Jersey Division of Taxation’s website.