Leases and Rentals
7
Rev. 3/23
Sales Tax is due if the leased property was subsequently leased for or converted to a
nonexempt use or is leased to a nonexempt lessee.
Property Exempt Due to Its Use
Certain property is exempt from tax when rented/leased for a particular purpose. For example,
certain machinery and equipment are exempt if used directly and primarily to produce
tangible personal property. Buses for public transportation are exempt, as are commercial
trucks, truck tractors, tractors, semitrailers, and vehicles used in combination therewith that
have a gross vehicle weight rating in excess of 26,000 pounds or are operated actively and
exclusively in interstate commerce. When renting or leasing such property, the lessee must
issue a fully completed Exempt Use Certificate (Form ST‑4)
or the Streamlined Sales and Use
Tax Agreement Certificate of Exemption (Form ST-SST) to the lessor.
See the New Jersey Sales Tax Guide for more information about which products and services
are subject to tax. See Sales Tax Exemption Administration for information about exemption
certificates.
Exempt Organizations and Governmental Agencies
Some organizations such as churches, hospitals, veterans’ organizations, and fire companies
are not required to pay Sales Tax when they rent or lease property for the exclusive use of the
organization. The Division of Taxation issues an Exempt Organization Certificate (Form ST-5)
only to those organizations that qualify for exempt status with the State of New Jersey. A
lessor who rents or leases to such an organization must obtain a photocopy of the
organization’s ST‑5 certificate as evidence of the exempt nature of the transaction.
Agencies of the federal government and the United Nations, as well as the State of New Jersey
and its political subdivisions, such as counties and municipalities, also are exempt from paying
Sales Tax. However, these organizations do not use ST‑5 certificates. Instead, they must
provide the lessor with a copy of a valid purchase order or contract, signed by an authorized
official. When the amount of the transaction is $150 or less, the lessor may accept a fully
completed Exempt Use Certificate (Form ST‑4) from these organizations in place of a purchase
order or contract.
Federal employees are exempt from Sales Tax on leases and rentals when payment is made
by federal check or voucher. Such transactions also are exempt if payment is made with a GSA
SmartPay credit card having a 0, 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