Sales and Use Tax Exemption Programs
Manufacturing Equipment
The New Jersey sales and use tax exemption for manufacturers removes sales tax on key machinery and apparatuses used in manufacturing, processing, assembling, or refining.
For
Businesses that purchase manufacturing equipment in New Jersey.
Benefit
No sales tax is paid on manufacturing machinery, apparatuses, or equipment, if such equipment is used primarily in the production of tangible personal property by manufacturers, processors, assemblers or refineries.
Details
The New Jersey sales and use tax exemption for manufacturers enables machinery, apparatuses, or equipment to be purchased without paying New Jersey sales and use tax, if such equipment is used primarily in the production of tangible personal property by manufacturers, processors, assemblers or refineries. There is no tax on construction except for the following capital improvements are taxable: planting shrubbery, trees, hedges, plants; seeding, sodding, grass plugging of new lawn; clearing and filling land associated with seeing, sodding of new lawn or planting shrubbery, trees; installing hard-wired security, burglar, or fire; installing carpeting and other flooring.
Foreign Trade Zones
New Jersey’s Foreign Trade Zones provide businesses with a unique advantage: products brought for manufacturing or assembly and later exported from the U.S. are exempt from duties. Companies operating within New Jersey’s five FTZs can import materials duty-free, only paying if products enter the domestic market.
For
Companies located in a Foreign Trade Zone.
Benefit
There are no duties on merchandise imported for manufacturing or assembling when the final product is exported outside of the United States. Duties are only paid when these products leave the zone for the domestic market.
Details
Companies operating in a Foreign Trade Zone (FTZ) pay no duties on merchandise imported for manufacturing or assembling when the final product is exported outside of the United States. Duties are only paid when these products leave the zone for the domestic market. In addition, there are no duties paid on merchandise shipped from one FTZ to another. There are five FTZs in NJ. More information can be found here.
Urban Enterprise Zones
The 32 Urban Enterprise Zones throughout New Jersey offer a range of advantages, including reduced sales and use tax rates, tax-exempt purchases on capital equipment and facility improvements, and discounted unemployment insurance rates. Manufacturers with over 250 full-time employees, can also benefit from tax exemptions on utilities like electricity and gas.
For
Companies based in designated Urban Enterprise Designated Zones
Benefit
Exemption from the sales and use tax for electricity and natural gas utilities for UEZ-certified manufacturers with 250+ full-time workers, 50% engaged in manufacturing.
Details
There are 32 designated Urban Enterprise Designated Zones (UEZ) in New Jersey. If a business is located within the zone, there are a variety of benefits. These included, a lower sale and use tax rate of 3.3125%, tax-free purchases on certain times such as capital equipment, facility expansions, and upgrades, subsidized unemployment insurances, and energy sales tax exemption for qualified manufacturing firms and Exemption from the sales and use tax for electricity and natural gas utilities for UEZ certified manufacturers with 250+ full-time workers, 50% engaged in manufacturing. There are 32 A map of UEZ locations can be found here.
