Happy Birthday, New Jersey Sales Tax: The Levy Turns 60 This Week

New Jersey’s modern statewide sales tax marks its 60th anniversary this week after decades of rate changes and political debate.

They say only two things in life are guaranteed. Death and taxes. Nobody knows this reality more than people in New Jersey who are quite literally being taxed to death, but one key tax in the state remains a constant reminder that your hard earned money is going to the state.

The New Jersey sales tax.

One of New Jersey’s most familiar taxes reaches a milestone this week as the state’s modern sales tax celebrates its 60th anniversary.

The permanent statewide sales tax took effect on July 1, 1966, when a 3% levy was signed into law under Gov. Richard J. Hughes. Since then, the tax has become a cornerstone of state revenue while remaining the subject of frequent political debate over rates and exemptions.

A tax with an earlier history

While many residents associate the sales tax with the 1960s, New Jersey first experimented with one much earlier. In 1935, Gov. Harold G. Hoffman approved a 2% sales tax, but the measure proved deeply unpopular and was repealed later that year.

Three decades later, lawmakers revived the concept as part of a broader effort to stabilize state finances. The July 1, 1966, tax established the framework that remains in place today.

Rates changed through the decades

The sales tax has increased and decreased several times over the past six decades.

The rate rose from 3% to 5% in 1982 under Gov. Thomas H. Kean before increasing again to 7% in 1990 under Gov. Jim Florio as part of a budget-balancing plan. Following public opposition, lawmakers reduced the rate to 6% in 1992.

Gov. Jon Corzine restored the rate to 7% in 2006 while expanding the tax to additional services. Gov. Chris Christie later approved a phased reduction that lowered the rate to 6.875% in 2017 and to the current 6.625% on Jan. 1, 2018.

How the tax works today

Unlike many states, New Jersey imposes a single statewide sales tax with no additional local sales taxes. However, businesses operating in designated Urban Enterprise Zones may qualify to charge customers half the standard rate, currently 3.3125%.

The state also exempts many everyday necessities, including most unprepared food, most clothing and footwear, prescription medications and several other essential items to reduce the tax burden on consumers.

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Key Points

• New Jersey’s permanent statewide sales tax took effect on July 1, 1966, making it 60 years old this week.
• The rate has changed from 3% to as high as 7% and currently stands at 6.625%.
• New Jersey has no local sales taxes, though qualified Urban Enterprise Zone businesses may charge a reduced rate.

Related: New Jersey, New Jersey sales tax, Richard J. Hughes, Urban Enterprise Zone, New Jersey history