SALT Report 2487 – The New Jersey Division of Taxation updated their guidance for sales of food, food ingredients, candy, dietary supplements, and soft drinks when sold by grocery stores. In most cases sales of prepared foods are subject to tax in New Jersey, therefore the taxability of the items discussed in the bulletin may differ if purchased anywhere other than a grocery store.
Food and Food Ingredients
Sales of food and food ingredients when purchased for human consumption are exempt from sales and use tax. Food and food ingredients are defined as substances in “liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value.” However, this definition does not apply to tobacco, alcoholic beverages, candy, or soft drinks.
Sales of candy are subject to sales and use tax in New Jersey. Candy is defined as any “preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces.” This definition does not include any preparation that contains flour as an ingredient and that does not require refrigeration.
The definition of candy does not apply to all preparations. Therefore, the definition should be used when trying to determine whether a product that is commonly thought of as candy is taxable as candy. For example, the definition would be used in a situation where a person is trying to determine if a product is candy as opposed to a cookie.
Sales of dietary supplements are exempt from sales and use tax in New Jersey. To qualify as a dietary supplement the product must be used to supplement the human diet, and:
- Contain one or more of the following dietary ingredients: vitamins; minerals; herbs or other botanicals; amino acids; a dietary substance used to supplement the diet by increasing the total dietary intake; a concentrate, metabolite, constituent, extract, or any combination of these ingredients,
- Is ingested in tablet, capsule, powder, softgel, gelcap, or liquid form, or if not intended for ingestion in one of these forms, is not represented as a conventional food item and is not represented for use as the sole item of a meal or diet, and
- Is required to be labeled as a dietary supplement, and has a “Supplemental Facts” box on the label as required pursuant to 21 C.F.R. 101.36
Sales of soft drinks are taxable in New Jersey. Soft drinks are defined as “nonalcoholic beverages that contain natural or artificial sweeteners.” The definition of soft drinks does not apply to beverages that contain milk or milk products, including soy, rice, or similar milk products, or to beverages that contain more than 50% vegetable or fruit juice.
Therefore, beverages that contain 50% fruit or vegetable juice are exempt from tax. In some cases the labels must be examined to determine the taxability based on the percentage of fruit or vegetable juice in a beverage. Additionally, liquid flavorings or liquid enhancers that are added to water are considered soft drinks and are taxable.
For a complete list of taxable items and their classification please see Appendix N of the SSUTA’s Rules and Procedures manual.
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