Is There a Tax on Clothing in New Jersey? A Comprehensive Guide

Yes, there is no sales tax on most clothing and footwear in New Jersey. This has been the case since 2006, making the Garden State a haven for shoppers looking to avoid that extra percentage on their apparel purchases.

Diving Deeper: New Jersey’s Clothing Tax Exemption

For decades, New Jersey’s approach to taxing clothing has been a topic of debate. Before 2006, clothing was subject to the state’s sales tax, putting New Jersey at a disadvantage compared to neighboring states with exemptions. The eventual elimination of the tax on most apparel items has been a boon for consumers and has stimulated retail activity within the state.

What Exactly is Considered “Clothing”?

The key here is understanding what the state considers “clothing” for the purposes of this exemption. Broadly speaking, it includes items designed to be worn on the body. This covers a vast range, from everyday wear like jeans, t-shirts, and dresses, to formal attire such as suits and gowns. Footwear, from sneakers and sandals to boots and dress shoes, also falls under the exemption.

Are There Any Exceptions?

While the vast majority of clothing is exempt, there are a few noteworthy exceptions. The most significant one is “fur clothing”, which is subject to sales tax. This specifically refers to clothing made of animal fur where the fur is more than three times the value of the next most valuable component material.

Another potential grey area involves protective equipment that could be considered clothing but is used primarily for safety or sport. These items may be taxable, depending on their specific characteristics and intended use. Consider helmets, shin guards, and specialized gear for certain sports – their taxability can be ambiguous and are often reviewed on a case-by-case basis.

The Benefits of the Exemption

The elimination of the sales tax on clothing offers several advantages:

• Increased Consumer Spending: Shoppers are more likely to spend money on clothing in New Jersey, knowing they won’t be hit with an additional tax. This boosts retail sales and contributes to the state’s economy.
• Enhanced Competitiveness: New Jersey retailers can compete more effectively with those in neighboring states that already had clothing tax exemptions, attracting shoppers from across state lines.
• Simplified Shopping Experience: Eliminating the tax makes shopping easier and more transparent for consumers. They know the price they see is essentially the price they pay (excluding local taxes where applicable, which are rare).

FAQs: New Jersey Clothing Tax

Here are some frequently asked questions to further clarify New Jersey’s clothing tax policies:

1. Is children’s clothing also exempt from sales tax?

Yes, all clothing intended for children, regardless of age or size, is exempt from New Jersey sales tax, just like adult clothing.

2. What about shoes? Are they tax-exempt too?

Absolutely. Footwear of all types, including sneakers, boots, sandals, and dress shoes, are exempt from sales tax in New Jersey.

3. Does the exemption apply to online purchases of clothing?

Yes, if the retailer has a physical presence in New Jersey or meets the economic nexus requirements, and the clothing is shipped to a New Jersey address, the purchase is exempt from sales tax. However, if the retailer is located outside of New Jersey and doesn’t meet these requirements, you might be responsible for paying use tax when filing your New Jersey income tax return, though this is rarely enforced for small individual purchases.

4. Are accessories like hats, scarves, and gloves tax-exempt?

Generally, yes. Most accessories intended to be worn as clothing, such as hats, scarves, gloves, and mittens, are considered clothing items and are therefore exempt from sales tax.

5. What about costumes? Are they taxed?

Costumes are generally exempt from sales tax in New Jersey, as they are considered clothing. However, elaborate theatrical costumes might fall into a grey area, especially if they incorporate non-clothing elements or are primarily used for professional performance.

6. If I buy clothing for my business, is it tax-exempt?

The exemption generally applies to clothing purchased for personal use. If the clothing is purchased for resale by your business, you can purchase the items tax-free by providing the vendor with a Resale Certificate. Clothing purchased by the business for employees can be taxable, it’s important to consult a tax professional for guidance on specific scenarios.

7. Are alterations to clothing taxable?

Alterations to clothing are generally taxable in New Jersey, as they are considered a service. This applies even if the clothing itself is exempt from sales tax.

8. What happens if I buy fur-trimmed clothing? Is it all taxable?

Only fur clothing, where the fur component is more than three times the value of the next most valuable material, is taxable. If the fur is a minor trim or accent, the clothing will likely still be exempt.

9. Are athletic uniforms and sports jerseys considered clothing?

Athletic uniforms and sports jerseys are generally considered clothing and are therefore exempt from sales tax. However, specialized protective gear, as mentioned earlier, may be taxable.

10. How does this clothing tax exemption benefit New Jersey’s economy?

The exemption encourages shoppers to spend more on clothing in New Jersey, boosting retail sales and creating jobs. It also makes New Jersey more competitive with neighboring states that have similar exemptions.

11. Where can I find the official New Jersey tax regulations regarding clothing?

You can find the official regulations and publications on the New Jersey Division of Taxation website. Search for information related to sales tax exemptions and specifically the exemption for clothing. Be sure to review the most up-to-date information.

12. If I’m unsure about the taxability of a specific clothing item, who should I contact?

If you have any questions regarding sales tax on clothing or other items, consult with a qualified tax professional or contact the New Jersey Division of Taxation directly for clarification. They can provide specific guidance based on your individual circumstances.