Sales Tax Holiday
As we are approaching “back-to-school”, many states have enacted sales tax holidays. As New Jersey is one of the states, this means sales & use tax on certain retail purchases of computers, school supplies, and sport or recreation equipment are exempt if they are sold to an individual purchaser for non-business use during the exemption period. For New Jersey, the exemption period runs from August 27 through September 05, 2022.
Below is a detailed list of the purchases that qualify:
- Computers, with a sales price of less than $3,000, per item
- School computer supplies, with a sales price of less than $1,000, per item
- Computer storage media, diskettes, and compact disks
- Handheld electronic schedulers, except devices that are cellular phones
- Personal digital assistants, except devices that are cellular phones
- Computer printers
- Printer supplies for computers, printer papers, and printer ink
- School art supplies
- Clay and glazes
- Paints, including acrylic, tempera, and oil
- Paintbrushes for artwork
- Sketch and drawing pads
- School instructions materials
- Reference books
- Reference maps and globes
- School supplies
- Book Bags
- Cellophane tape
- Composition books
- Expandable, pocket, plastic, and manila folders
- Index cards and index card boxes
- Pencil boxes and other school supply boxes
- Blackboard chalk
- Glue, paste, and paste sticks
- Lunch boxes
- Legal pads
- Pencils and pencil sharpeners
- Writing tablets
- Rulers and scissors
- Loose leaf ruled notebook, copy, graph, tracing, manila, colored, construction, and poster board paper
- Sport or recreation equipment
- Ballet and tap shoes
- Mouth guards
- Roller and ice skates
- Shin guards
- Shoulder pads
- Ski boots
- Cleated or spiked athletic shoes
- Hand or elbow guards
- Life preservers and vests
- Baseball, bowling, boxing, hockey, and golf gloves
- Wetsuits and fins
A few thoughts to keep in mind: The sellers may offer store discounts and/or coupons to reduce the sales price of computers priced greater than $3,000 and computer supplies priced over $1,000 in order for the items to be eligible for the sales tax holiday. However, manufacturer’s coupons and rebates that may result in reducing the price of the item will not qualify the item for the exemption. Also, items that are normally sold together as a single unit cannot be priced separately in order to be eligible for the exemption. Lastly, if a customer exchanges an item that was purchased during the sales tax holiday for a different color or size and the exchange takes place after the time period of the exemption, the seller should not charge sales tax. If the exchange is for a different item, sales tax will apply.
Property Tax Relief
The new budget signed into law recently by Governor Phil Murphy will provide much needed property tax relief for homeowners and rebates for renters. The state expanded the ANCHOR (Affordable New Jersey Communities for Homeowners and Renters) Tax Relief Program. The expansion of the program will reduce property taxes for over 1.16 million homeowners and 900,000 renters beginning in 2023.
Under the expanded ANCHOR Property Tax Relief Program, homeowners and renters rebates and benefits are as follows:
- Homeowners with household income under $150,000 in 2019 will receive a $1,500 property tax credit on their property tax bill
- Homeowners with household income between $150,000 and $250,000 in 2019 will receive a $1,000 property tax credit on their property tax bill
- Renters with income up to $150,000 in 2019 will receive $450 to help offset the rent increases
On average, a New Jersey property tax bill was approximately $9,300 in 2021. With the ANCHOR tax relief program, rebates could offset over 16% of the average property tax bill. For middle-class homeowners, the $1,500 in direct relief would reduce the average bill to $7,800, a property tax level New Jersey hasn’t seen since 2012.
The ANCHOR program expands and replaces the Homestead Rebate Program. Under the Homestead Rebate Program, renters weren’t eligible for the benefits. The ANCHOR recognizes that rents normally increase due to a rise in property taxes.
Sales Tax on Medical Cannabis
As of July 01, 2022, any New Jersey resident enrolled in the state’s Medicinal Cannabis Program will no longer pay sales tax on cannabis and cannabis related products purchased at a medicinal dispensary.
The Division updated and issued Technical Advisory Memorandum TAM-2015-1(R) to include Inheritance Tax about Convertible Virtual Currency guidance.
For New Jersey Inheritance Tax purposes, convertible virtual currency owned by a decedent is intangible property of the decedent’s estate. The estate is required to determine the FMV (fair market value), in U.S. dollars, of the convertible virtual currency as of the decedent’s date of death. That amount would then be reported on the Inheritance Tax return. New Jersey Inheritance Tax follows federal tax guidelines for determining the FMV of convertible virtual currency as outlined in IRS Notice 2014-21.
If you have any questions regarding the above tax topics, please contact our office for assistance.
Article Submitted by Béatrice Calen, EA