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August 27, 2010

According to the Tax Foundation, New Jersey’s 7 percent retail sales tax ranks the state 19th in the country in terms of what’s known as a "transparent" tax – meaning citizens are aware of how much they pay and when. There are no local sales taxes in the Garden State, although there are some localities in Urban Enterprise Zones that are exempt from charging full tax rates on certain purchases. What’s more, New Jersey exempts many types of purchases from sales tax, such as clothing and food.

It's a very different situation when municipalities levy their own sales tax on top of the state’s assessment, which is what happens in the states with the top sales tax burden. Tennessee has the highest sales tax at 9.44 percent, 2.44 percent of it local. California, which is ranked second, has a mandatory 1 percent local sales tax on top of its 8.25 percent state tax. Our neighbors New York, Pennsylvania and Delaware rank 6th, 30th and 47th, respectively. New York has a state tax of 4 percent and local tax of 4.52 percent; Pennsylvania has a state retail sales tax of 6 percent with a local 0.33 percent tax, and Delaware has no sales tax at all, just like Montana and Oregon.

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