New Jersey Local Business Taxes: UEZ Half-Rate Sales Tax, Hotel Taxes and the Newark/Jersey City Payroll Tax
New Jersey Local Business Taxes: UEZ Half-Rate Sales Tax, Hotel Taxes and the Newark/Jersey City Payroll Tax
Most New Jersey business owners deal with a short list of state taxes: the 6.625% sales tax, the Gross Income Tax or Corporation Business Tax depending on how the business is organized, and the registration process run through NJ-REG. Local rules sit on top of that list, and three of them cost real money when owners miss them. They are the Urban Enterprise Zone (UEZ) reduced sales tax, the hotel and occupancy charges on lodging, and the 1% employer payroll tax in two cities. This guide covers how each one works, where it applies and what you need to do.
This is informational content, not legal or tax advice. Rates, lists and caps change, so confirm every figure with the agency named here before you set prices, file a return or sign a lease. For anything beyond a simple setup, talk to a New Jersey attorney or a CPA.
What the UEZ Program Covers
An Urban Enterprise Zone is a designated area where certified businesses can use a reduced sales tax rate and buy most goods and services tax-free. The Department of Community Affairs (DCA) runs the program. Its 2026 list names 37 municipalities. When you search for an nj uez list or a UEZ map, use the 2026 DCA list, not an older copy posted online.
The program has firm limits. A 2021 law, P.L.2021, c.197, barred new zones from being created, so no municipalities can be added to the list. Salem County has its own 3.3125% rate under a separate rule: it applies to qualifying in-person retail sales of goods made at a Salem County place of business, with no UEZ certification needed, which is why it comes up in searches for salem county sales tax. The list is by municipality, so check your specific town on it before you quote a rate, and confirm with DCA that your business location qualifies.
The Half-Rate Sales Tax: 3.3125%
New Jersey's standard sales tax rate is 6.625%. Certified UEZ sellers charge 3.3125%, exactly half, on most in-person sales of goods. That is the benefit most people mean when they search for nj uez sales tax. The reduced rate is only for certified sellers. Until DCA certifies your business, you collect the full 6.625%.
The rate is written for most in-person sales of goods, so confirm how each product line and sales channel is treated before you build a price list around the lower rate.
Buying Tax-Free with the UZ-5 and the $100,000 Cap
Certified businesses can also buy most goods and services without paying sales tax by giving vendors the UZ-5 certificate. The benefit has a ceiling. Since January 1, 2022, only the first $100,000 of annual taxable purchases is exempt. Once you pass that amount, your purchases are taxed normally. A manufacturer, retailer or restaurant buying equipment or inventory in volume should track this cap from the first month of the year.
Contractors work under a separate rule. A contractor using the UZ-4 certificate has its own $100,000 cap, and that cap is separate from the UZ-5 cap. Choose the certificate that matches the work before you give it to a vendor. Using the wrong certificate on a purchase is the kind of error that can create an assessment later.
Getting Certified and Staying Certified
Certification runs through DCA's UEZ program, which uses the Premier Business Services system. Confirm the current application steps, documents and any fee on DCA's page, because the process can change. Once certified, you have three recurring obligations:
- File the UZ-50 every month, due by the 20th.
- File the annual report with DCA.
- Recertify every three years.
Treat the 20th as a fixed date, the same as your sales tax return. Missing a monthly filing puts the benefit you certified for at risk.
Hotel and Occupancy Taxes
Lodging businesses face the most layered set of charges, and most New Jersey hotel tax questions come down to three layers. The base is the State Occupancy Fee, which is 5% in most of the state. It drops to 1% in Atlantic City, Elizabeth, Newark and Jersey City, and it is 3.15% in the three Wildwoods. On top of the state fee, many towns add a municipal occupancy tax of up to 3%. The Division of Taxation's list dated October 5, 2026 includes about 217 towns, so check yours before you set rates.
| Area | State occupancy fee | Other local charges |
|---|---|---|
| Most New Jersey towns | 5% | Municipal occupancy tax up to 3% in about 217 towns |
| Atlantic City | 1% | 9% luxury tax, with drinks taxed at 3% |
| Elizabeth, Newark, Jersey City | 1% | Each city levies its own hotel tax instead of the municipal occupancy tax; confirm the rate with the city |
| The three Wildwoods (Cape May County) | 3.15% | 2% tax plus 1.85% assessment |
| Meadowlands District | Confirm with the Division of Taxation | 3% assessment |
Atlantic City's 9% luxury tax is the largest single local charge in the table. Confirm with the Division of Taxation which charges appear on a given bill and who remits each one.
Cape May County comes up often in searches for cape may county tourism tax. The research behind this guide verified the Wildwoods charges in the table, but it did not confirm a separate county-level tourism tax. Do not assume one exists or that one does not. Ask the Division of Taxation before you finalize a rate sheet for a Cape May County property.
The Newark and Jersey City Payroll Tax
Newark and Jersey City each impose a 1% employer payroll tax. These are the only local payroll taxes in New Jersey, so an employer in any other municipality does not face a local payroll tax of this kind.
If you have employees working in either city, confirm with that city's tax office how it defines covered payroll, which employees count, the filing schedule and any exemptions. This guide does not state those details because the research did not verify them.
Licenses and Registrations: What Is and Isn't Required
Many owners assume a county or state license is needed before they can collect these taxes. New Jersey issues no general statewide business license, and counties license nothing. Tax registration runs through NJ-REG. The Business Registration Certificate (BRC) that comes out of it is proof of tax registration, not a license. Contractors doing business with the State and other public agencies also need a BRC.
Municipalities issue their own licenses and permits, and many occupations need a professional or industry license from the Division of Consumer Affairs or another agency. A hotel or restaurant may need a local license as well, so check with your town.
Quick Checklist
- Find your municipality on the 2026 DCA list, then confirm your location with DCA.
- Register through NJ-REG and get a sales tax certificate of authority if you sell taxable goods.
- Apply for UEZ certification, then calendar the monthly UZ-50 due date, the annual report and the three-year recertification.
- Track taxable purchases against the $100,000 UZ-5 cap, and track the separate UZ-4 cap if you are a contractor.
- If you run lodging, confirm the state fee and any municipal occupancy tax for your exact address with the Division of Taxation.
- If you have payroll in Newark or Jersey City, confirm the 1% employer payroll tax filing requirements with the city.
Where to Confirm Each Figure
Start with the New Jersey Division of Taxation at nj.gov/treasury/taxation. Sales tax registration and permits go through the NJ Business Portal. Formation and business entity questions go to the Division of Revenue and Enterprise Services (DORES) at nj.gov/treasury/revenue. The UEZ list and certification rules sit with DCA, so contact DCA directly for the current 2026 list.
If you operate a hotel, have employees in Newark or Jersey City, or plan a pricing model around the UZ-5 cap, a short review by a New Jersey CPA or tax attorney is worth doing before you commit. They can check these rules against your actual sales, purchases and payroll.