Hotel Occupancies and New Jersey Taxes

Rev. 3/23

Tax Topic Bulletin S&U-13

Introduction....................................................................................................................................................................... 2

General Information ....................................................................................................................................................... 2

Registration ....................................................................................................................................................................... 2

State Occupancy Fee ..................................................................................................................................................... 2

Municipal Occupancy Tax ............................................................................................................................................ 3

Occupancies Subject to Tax ........................................................................................................................................ 3

Occupancies Not Subject to Tax ............................................................................................................................... 3

Permanent Residents ................................................................................................................................................ 4

Exempt Organizations ............................................................................................................................................... 5

Government Agencies .............................................................................................................................................. 5

Common Hotel Fees ...................................................................................................................................................... 6

Miscellaneous Hotel Fees ............................................................................................................................................. 7

Parking Charges ............................................................................................................................................................... 7

Rooms for Assembly ...................................................................................................................................................... 8

Catering Services ............................................................................................................................................................. 8

Breakfast Included Occupancies ................................................................................................................................ 8

Atlantic City ....................................................................................................................................................................... 8

Luxury Tax ...................................................................................................................................................................... 8

State Occupancy Fee ................................................................................................................................................. 8

Tourism Promotion Fee ............................................................................................................................................ 8

Casino Hotel Room Occupancy Surcharge ....................................................................................................... 9

Casino Room Fee ........................................................................................................................................................ 9

Parking Fee ................................................................................................................................................................... 9

Wildwoods, Cape May County ................................................................................................................................... 9

Meadowlands Regional Hotel Use Assessment .................................................................................................. 9

Purchases by Hotels .................................................................................................................................................... 10

Connect With Us ........................................................................................................................................................... 10

Hotel Occupancies and New Jersey Taxes

Rev. 3/23 2

Introduction

This bulletin explains the application of the New Jersey Sales and Use Tax Act to the sale of

hotel occupancies and related property, services, and fees. It also explains other taxes

administered by the Division of Taxation that may apply to the sale of hotel occupancies. It is

designed to provide guidance to taxpayers and is accurate as of the date issued. Subsequent

changes in tax law or its interpretation may affect the accuracy of this publication.

This document does not address transient accommodations. For information on transient

accommodations, see Taxes Imposed on Charges for the Rental of Transient Accommodations

General Information

Charges for occupancies of a room or rooms in a hotel in New Jersey are subject to Sales Tax,

the State Occupancy Fee, and, if applicable, the Municipal Occupancy Tax. “Occupancy” means

the use or possession or the right to the use or possession, of any room in a hotel. There is an

expectation that customary services, such as maid service and front desk reception, will be

provided. Sales tax does not apply to the leases or rentals of commercial real property.

The current Sales Tax rate is 6.625%. For information on prior Sales Tax rates, see

Sales and

Use Tax Rate Change.

Registration

Every seller of taxable occupancies must register with New Jersey are required to register with

the State as a seller and must collect and remit Sales and Use Tax to the State. Businesses can

through the Division of Revenue and Enterprise Services’ NJ Business Gateway

Services website.

For more information about starting a business in New Jersey, see our Starting a Business Tax

Guide

State Occupancy Fee

A 5% State Occupancy Fee is imposed on charges for occupancies that are subject to Sales

Tax. However, in cities where such occupancies are already subject to a municipal tax, the State

Occupancy Fee is imposed at a lower rate (Atlantic City, Elizabeth, Newark, and Jersey City -

1%; and Wildwood, Wildwood Crest, and North Wildwood - 3.15%). The State Occupancy Fee

is not subject to Sales Tax and must be separately stated from Sales Tax on invoices

provided to occupants.

Hotel Occupancies and New Jersey Taxes

Rev. 3/23 3

Municipal Occupancy Tax

New Jersey law authorizes any New Jersey municipality, other than Elizabeth, Newark, Jersey

City, Atlantic City, Wildwood, Wildwood Crest, and North Wildwood, to adopt an ordinance to

impose a municipal tax on occupancies in that municipality, which can be less than or equal

to 3%.

See the Municipal Occupancy Tax List

for a list of municipalities that have enacted this tax.

Occupancies Subject to Tax

For Sales Tax purposes, “hotel” means a building or portion thereof that is regularly used and

kept open as such for the lodging of guests. “Occupant” means a person who, for a

consideration, uses, possesses, or has the right to use or possess, any room in a hotel under

any lease, concession, permit, right of access, license to use or other agreement, or otherwise.

Hotels can be open year-round or seasonally and are typically maintained by on-site

management with front desk reception. The relationship between the operator of the

establishment and an occupant is considered that of an innkeeper and guest, not that of a

landlord and tenant. The signing of a lease cannot overcome the presumption that the facility

is operated as a hotel.

Examples of a hotel include, but are not limited to, the following:

• An apartment hotel, bed and breakfast, motel and inn;

• A boarding house or rooming house containing eight or more units;

• A condotel (a building used as both a condominium and a hotel); and

• Any other building or group of buildings in which sleeping accommodations are normally

available to the public on a transient basis.

The manner in which a hotel is owned has no effect on the Sales Tax treatment of its room

occupancies. For example, privately owned properties may be operated in a manner consistent

with offering hotel occupancies for a portion of the year and include services customarily

provided by hotels such as: maid service, linen service, room service, safe storage, and

concierge services. The privately owned property is thus treated as a hotel.

Occupancies Not Subject to Tax

Examples of occupancies that are not subject to Sales Tax include, but are not limited to:

• Places of assembly;

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Rev. 3/23 4

• Healthcare and similar facilities such as a nursing home, assisted living community,

rehabilitation center, etc.;

• Summer camps and other overnight camps;

• Campsites available for trailers, recreational vehicles, or tent camping;

• College dormitories and other student-housing facilities.

Occupancies that are not subject to Sales Tax also are not subject to the State Occupancy Fee

and the Municipal Occupancy Tax.

Permanent Residents

An occupant of any room or rooms in a hotel for at least 90 consecutive days is considered a

permanent resident for the period of such occupancy. A hotel operator must collect Sales Tax,

the State Occupancy Fee, and, if applicable, the Municipal Occupancy Tax from an occupant

until the occupancy reaches 90 consecutive days. When continuous occupancy has reached

90 days, the fee/taxes are no longer imposed and the fee/taxes previously collected are

refundable to the occupant. If the fee/taxes are not refunded to the occupant by the hotel

operator, the occupant may request a refund directly from the Division of Taxation by filing

Form A-3730

, Claim for Refund.

If an up-front written agreement exists between the parties for a rental of 90 consecutive days

or more, the hotel operator is not required to charge the fee/taxes on the occupancy. However,

if the occupant vacates the hotel in less than 90 days, the fee/taxes are due on the full

occupancy period.

Example 1

An airline enters into a written contract with a hotel for the continuous occupancy of five

rooms for use by its flight crews for a period of one year. The hotel is not required to charge

the fee/taxes on the occupancy of the five rooms. This is true regardless of whether the flight

crew actually occupies the five rooms all 365 days. As long as the hotel kept the rooms

available for the flight crews on an ongoing basis during the contract period, and the airline

paid for the rooms, the permanent resident exemption applies.

Example 2

A corporation reserves and pays a hotel for a room four times during the year for use by its

out-of-State employees. Because the corporation has not entered into a written agreement

for continuous occupancy, the fee/taxes are due on the charges for the occupancy. The

corporation’s employees occupy rooms at the hotel for a total of 100 days. Although the

Hotel Occupancies and New Jersey Taxes

Rev. 3/23 5

corporation paid for over 90 days of hotel occupancy throughout the year, the corporation is

not eligible for a refund. The 90-day time period cannot be established by aggregating the

total number of days that the corporation has reserved and paid for occupancies. The

corporation can only qualify for a refund of the fee/taxes for any stay that was for a continuous

period of 90 days or more.

Example 3

A couple stays at a motel with no written agreement as to the duration of the stay. Once the

occupancy reaches 90 days, the motel ceases to charge the fee/taxes and the couple may

apply to the motel or to the Division for a refund of the fee/taxes paid on the first 90 days.

Exempt Organizations

Exempt organizations registered with the New Jersey Division of Taxation that provide an

Exempt Organization Certificate (Form ST-5) to a hotel and pay with the organization’s funds

are exempt from paying Sales Tax on occupancy charges. However, they must still pay the

State Occupancy Fee and, if applicable, the Municipal Occupancy Tax.

If an exempt organization provides Form ST-5 to a hotel and pays the occupancy charges from

an individual’s account, the purchase is subject to Sales Tax, the State Occupancy Fee, and, if

applicable, the Municipal Occupancy Tax. This is true regardless of the method of payment

(personal check, credit card, cash, etc.) and regardless of the organization’s intent to

subsequently reimburse the individual.

Government Agencies

Any New Jersey State agency, political subdivision of the State of New Jersey, federal agency,

the United Nations, or any other international organization of which the United States is a

member is exempt from paying Sales Tax, the State Occupancy Fee, and, if applicable, the

Municipal Occupancy Tax on otherwise taxable occupancies. An exempt organization

certificate or number is not required for a government agency to make tax-exempt purchases

or secure tax-exempt lodging in this State.

In transactions with government agencies, the acceptable proof of exemption is a copy of a

government purchase order, official contract, or order on official government letterhead

signed by a qualified officer. Payment must be made by the agency’s check or voucher for the

exemption to apply. If payment is made from an individual’s account, the purchase is subject

to Sales Tax, the State Occupancy Fee, and, if applicable, the Municipal Occupancy Tax

regardless of the method of payment (personal check, credit card, cash, etc.) and irrespective

of the agency’s intent to subsequently reimburse the individual.

Hotel Occupancies and New Jersey Taxes

Rev. 3/23 6

Federal employees are exempt from New Jersey Sales Tax, the State Occupancy Fee, and, if

applicable, the Municipal Occupancy Tax if payment is made by a GSA SmartPay credit card

having a 0, 5, 6, 7, 8, or 9 as the sixth digit of the account number (credit card centrally billed

to and paid by the federal government). If payment is made with a GSA SmartPay credit card

having a 1, 2, 3, or 4 as the sixth digit, the transaction is taxable because the card is individually

billed to and paid by the employee.

In addition, certain exemptions are granted to qualified foreign diplomatic and consular

personnel who reside in the United States. For information concerning the exemptions, see

Diplomatic/Consular Sales Tax Exemptions

Common Hotel Fees

Early Departure Fees are not subject to Sales Tax if they are similar to cancellation fees. If a

sale is cancelled (e.g., the occupant checks out early), there is no taxable transaction and the

early departure fee is not subject to Sales Tax. However, if the hotel charges the agreed room

rate for the remaining time, even though the occupant checked out early and did not actually

use the room during that time, this charge constitutes rent for the occupancy (i.e., the right to

use or possess) of a hotel room and is taxable.

Late Checkout Fees are subject to Sales Tax. This fee constitutes an additional charge for the

occupancy (i.e., the right to use or possess) of a hotel room and is taxable.

Cancellation Fees are not subject to Sales Tax. If a sale is cancelled, there is no taxable

transaction and the cancellation fee is not subject to Sales Tax.

Forfeited Deposits are not subject to Sales Tax. A deposit is considered to be a payment

against a future sale; Sales Tax is not due on a deposit until the actual occupancy that the

deposit applies to occurs. If a sale is cancelled, there is no taxable transaction, and the deposit

is not subject to Sales Tax.

Reward Points are considered consumer incentives/promotions, and Sales Tax is calculated

depending on how the discount is given. Generally, if a room rate is offered at a discounted

price and a third party will reimburse the hotel, then Sales Tax is based on the full room rate.

If the hotel offers a discount on the room rate but will not be reimbursed, then tax on the

room rate is based on the discounted price. If the hotel offers a free night’s stay with no

reimbursement by a third party, Sales Tax should not be charged on the free night. If a hotel

offers two nights for the price of one, Sales Tax is based on the cost of one night.

Hotel Occupancies and New Jersey Taxes

Rev. 3/23 7

Resort Fees may be optional or mandatory and may include different components. If the

Resort Fee is mandatory (the occupant cannot opt out of paying the Resort Fee), the fee is

considered part of the sales price of the occupancy and is taxed accordingly. If the Resort Fee

is an optional charge, the fee is not subject to tax so long as each component of the Resort

Fee is not subject to tax. For example, if the optional Resort Fee represents charges that aren’t

subject to tax, such as daily access to the fitness center or the pool, daily newspaper delivery,

and Wi-Fi access, the charge for the fee is not taxable since each component of the Resort Fee

is not subject to tax. However, if the optional Resort Fee includes a taxable charge or charges,

such as parking at the facility, the charge for the entire fee is taxable.

Miscellaneous Hotel Fees

The following is a list of optional miscellaneous fees that a hotel may charge, with an indication

of whether the item is taxable (T) or exempt (E) from Sales Tax:

Bellhop ........................................................................ E

Cot rentals ................................................................. T

Daily newspaper delivery ..................................... E

DVD rentals ............................................................... T

Housekeeping .......................................................... T

Laundering/dry cleaning of clothing ............... E

Luggage storage ..................................................... T

Pet fees ....................................................................... T

Refrigerator rentals ................................................ T

Room service ............................................................ T

Wi-Fi/internet access ............................................. E

Parking Charges

New Jersey imposes Sales Tax on the receipts from parking, storing, or garaging a motor

vehicle, excluding charges for the following: residential parking; employee parking when

provided by an employer or at a facility owned or operated by the employer; municipal

parking, storing, or garaging; and such receipts subject to tax pursuant to any other law or

ordinance. Hotel parking is taxable unless a valid exemption exists (e.g., residential parking,

an exempt organization, or a government agency). For more information on parking charges,

see Parking, Storing, Garaging Motor Vehicles & New Jersey Sales Tax

Hotel Occupancies and New Jersey Taxes

Rev. 3/23 8

Rooms for Assembly

Sales Tax does not apply to the rental of rooms for the purpose of assembly. Conference

rooms, reception halls, and hospitality suites with no bedrooms are deemed rooms for

assembly. Sales Tax, the State Occupancy Fee, and, if applicable, the Municipal Occupancy Tax

are imposed on charges for the occupancy of hotel rooms and suites (with bedrooms) even

when occupants intend only to use the room(s) for the purposes of assembly (e.g., business

meetings, event preparation).

Catering Services

Charges for catering services are subject to Sales Tax.

Breakfast Included Occupancies

A facility may provide occupants with breakfast, whether continental or full-service, as part of

the amount charged for the occupancy. The rent for an occupancy in such facilities includes

breakfast, just as it also may include free parking, use of fitness facilities, afternoon snacks,

and various other amenities, all of which are provided by the facility as part of the occupancy.

The total amount charged to the occupant is subject to Sales Tax. The law specifies that the

State Occupancy Fee, and, if applicable, the Municipal Occupancy Tax are based on the same

amount charged for an occupancy that is subject to Sales Tax. Therefore, for “breakfast

included” occupancies, the total amount charged to the occupant also is subject to the State

Occupancy Fee, and, if applicable, the Municipal Occupancy Tax.

Atlantic City

Luxury Tax

Charges for rentals of rooms, apartments, or other facilities in hotels, motels, bed and

breakfasts, rooming and boarding houses, or similar establishments for less than one year are

subject to a 9% Atlantic City Luxury Tax. If the rental is for less than 90 days, Sales Tax at the

rate of 3.625% also is imposed. The charges for the Atlantic City Luxury Tax and New Jersey

Sales Tax must be separately stated on the invoice, or the entire bill is subject to Sales Tax.

State Occupancy Fee

A fee of 1% is imposed on charges for occupancies in Atlantic City.

Tourism Promotion Fee

A fee of either $1 or $2 per day is charged for each room rental in a hotel, motel, inn, rooming

house, etc., located in Atlantic City. This fee applies to each room either occupied or possessed

by guests, other than as a place of assembly, and also is due on complimentary occupancies.

Hotel Occupancies and New Jersey Taxes

Rev. 3/23 9

The fee of $2 per day applies to each occupied room in a casino hotel. The fee of $1 per day

applies to each occupied room in all other facilities. This fee is imposed on the facility and is

thus included in the sales price for both Sales Tax and Luxury Tax purposes if billed to the

occupant, regardless of whether or not it is separately stated.

Casino Hotel Room Occupancy Surcharge

Effective March 1, 2022, a $2 per day surcharge is imposed on each occupied room, other than

rooms used as a place of assembly, in a casino hotel located in Atlantic City. The surcharge is

also due with respect to “complimentary” occupancies. The surcharge is imposed on the casino

hotel and is thus included in the sales price for both Sales Tax and Luxury Tax purposes if billed

to the customer, regardless of whether or not it is separately stated.

Casino Room Fee

A fee of $3 per day is charged on each hotel room in a casino hotel occupied by a guest,

whether for consideration or as a complimentary item. This is in addition to any other taxes

and/or fees imposed on such occupancies. This fee is imposed on the facility and is therefore

included in the sales price for both Sales Tax and Luxury Tax purposes if billed to the customer,

regardless of whether or not it is separately stated.

Parking Fee

A minimum charge of $3 per day is imposed for the use of a parking space for parking,

garaging, or storing motor vehicles on property owned or leased by a casino hotel in Atlantic

City. For more information, see Atlantic City Casino Parking Fees

See Atlantic City: Luxury Tax, New Jersey Sales Tax & Other Fees, for further information.

Wildwoods, Cape May County

Rooms in the Wildwoods (Wildwood, Wildwood Crest, and North Wildwood) are subject to a

2% Cape May County Tourism Sales Tax, a 1.85% Cape May County Tourism Assessment

, and

the State Occupancy Fee of 3.15%. This is in addition to the 6.625% New Jersey Sales Tax that

is imposed on all occupancies of a room or rooms in a hotel in the State. Room rentals in the

Wildwoods are assessed taxes and fees totaling 13.625%.

Meadowlands Regional Hotel Use Assessment

Charges for occupancies of hotels located in the Meadowlands District, including hotels

located on State-owned land, as well as hotels located anywhere within designated

municipalities, even if they fall outside of the Meadowlands District, also are subject to a

Meadowlands Regional Hotel Use Assessment of 3%. The assessment is imposed on room

rentals that are currently subject to the New Jersey Sales Tax and is in addition to the Sales

Hotel Occupancies and New Jersey Taxes

Rev. 3/23 10

Tax, the State Occupancy Fee, and the Municipal Occupancy Tax, as well as any other tax or

fee imposed by local ordinance on hotel occupancies.

The Meadowlands District refers to the Hackensack Meadowlands District designated by the

New Jersey Meadowlands Commission as a 30.4-square-mile area along the Hackensack River

covering portions of 14 municipalities located in Bergen and Hudson Counties within New

Jersey. The 14 municipalities with portions in the Meadowlands District include: Carlstadt, East

Rutherford, Little Ferry, Lyndhurst, Moonachie, North Arlington, Ridgefield, Rutherford, South

Hackensack, and Teterboro in Bergen County; and Jersey City, Kearny, North Bergen, and

Secaucus in Hudson County.

Inquiries about whether specific hotels are located within the Meadowlands District should be

directed to the Meadowland Commission’s Zoning Officer of the Day at (201) 460-1700.

Purchases by Hotels

Hotels must pay Sales or Use Tax on the purchase of furniture, linens, and any items that are

left in the room for use by occupants (e.g., toiletry items, such as toilet paper, tissues,

shampoo), reading materials, and items that may be provided but not transferred to the

occupant (e.g., televisions, microwaves, coffee makers, hair dryers). A hotel may use a resale

certificate when purchasing items that it sells to guests; the hotel must separately state this

item on the invoice provided to the guest (e.g., gift shop item).

Connect With Us

Email your State tax questions;

Visit a Regional Information Center;

Call (609) 292-6400;

Subscribe to our NJ Tax Alert E-News;

This document is designed to provide guidance to taxpayers and is accurate as of the date issued.

In March 2023, this document was revised to include information about payments made with a

GSA SmartPay credit card that has 5 as the sixth digit.