Is Shipping Taxable in New Jersey? New Jersey Sales Tax Rules for Delivery Charges

Is Shipping Taxable in New Jersey?

In New Jersey, sales tax is imposed on delivery charges for property or services delivered from a seller directly to a customer when the items sold are subject to tax. If the items or services sold are taxable, the related delivery charges are generally taxable.

However, New Jersey does not impose tax on delivery charges for nontaxable items, such as clothing, property purchased for resale, and property covered by another statutory exemption provision.

Source: New Jersey Division of Taxation, Publication SU-4 https://www.nj.gov/treasury/taxation/pdf/pubs/sales/su4.pdf

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General Rule: Delivery Charges Are Taxable When the Sale Is Taxable

New Jersey generally treats delivery charges as taxable when the underlying property or service is taxable.

For example:

Product price: USD 100 Delivery charge: USD 8 Taxable amount: USD 108

If the product is taxable, New Jersey sales tax generally applies to the full USD 108 amount.

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Does Separately Stating Shipping Make It Non-Taxable?

Generally, no. Based on New Jersey Publication SU-4, the key factor is whether the item or service sold is taxable.

For example:

Product price: USD 100 Shipping charge: USD 8 Total: USD 108

If the item sold is taxable, the USD 8 shipping charge is generally taxable even if separately stated.

This is different from states where separately stated shipping may be excluded from tax.

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What Counts as Delivery Charges in New Jersey?

New Jersey defines delivery charges as charges by the seller for preparation and delivery to a location designated by the purchaser of personal property or services. These charges include, but are not limited to:

• transportation;
• shipping;
• postage;
• handling;
• crating;
• packing.

For ecommerce sellers, this means that shipping, postage, handling, crating, and packing charges may all be taxable when connected to a taxable sale.

For example:

Product price: USD 100 Shipping charge: USD 8 Handling charge: USD 3 Packing charge: USD 2 Taxable amount: USD 113

If the underlying product is taxable, these delivery-related charges are generally taxable as well.

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Delivery Charges for Nontaxable Items

New Jersey does not impose tax on delivery charges for nontaxable items.

Examples may include:

• qualifying clothing;
• property purchased for resale;
• property covered by another statutory exemption;
• transactions supported by a valid resale certificate;
• transactions supported by a valid exemption certificate.

For example:

Nontaxable clothing price: USD 100 Delivery charge: USD 8 Total: USD 108

If the clothing qualifies as nontaxable, the related delivery charge is generally not subject to New Jersey sales tax.

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Mixed Orders: Taxable and Nontaxable Items

Some ecommerce orders may include both taxable and nontaxable items. In these cases, sellers should carefully review how delivery charges are allocated or calculated.

Sellers should:

• identify taxable and nontaxable items;
• confirm whether the platform or tax engine allocates delivery charges correctly;
• retain order-level tax calculation records;
• avoid applying a blanket taxable or non-taxable treatment unless supported by the transaction facts.

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Common Compliance Issues for Ecommerce Sellers

Assuming separately stated shipping is exempt

In New Jersey, separately stating shipping does not generally make it non-taxable if the underlying item or service is taxable.

Ignoring handling, crating, and packing

New Jersey includes handling, crating, and packing in delivery charges. Sellers should not focus only on shipping.

Misclassifying clothing or exempt products

Delivery charges for nontaxable items are generally not taxable, but sellers must correctly classify the product and retain proper documentation.

Overlooking mixed orders

Orders containing both taxable and nontaxable items may require more detailed tax handling.

Applying another state’s rule to New Jersey

Shipping taxability varies by state. New Jersey should be configured separately from states with different delivery charge rules.

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Practical Tips for Sellers Shipping to New Jersey

Sellers shipping goods or providing taxable services to New Jersey customers should first determine whether the underlying item or service is taxable. If it is taxable, delivery charges should generally be included in the taxable amount.

Sellers should also identify shipping, postage, handling, crating, and packing charges correctly. For exempt transactions, sellers should retain resale certificates, exemption certificates, product classification records, invoices, and order details. For marketplace and direct sales, platform tax settings should align with New Jersey’s rules.

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Conclusion

In New Jersey, delivery charges from a seller directly to a customer are taxable when the items or services sold are taxable. Delivery charges include transportation, shipping, postage, handling, crating, and packing.

Delivery charges for nontaxable items, such as qualifying clothing, property purchased for resale, or property covered by another statutory exemption, are generally not taxable.

For ecommerce sellers, the key takeaway is clear: New Jersey shipping and delivery charges generally follow the taxability of the underlying item or service.

Source: New Jersey Division of Taxation, Publication SU-4 https://www.nj.gov/treasury/taxation/pdf/pubs/sales/su4.pdf