Understanding Guest Tax Laws for Small Hotels and B&Bs in NJ

If you run a small hotel or bed and breakfast in New Jersey, here’s a question: Are you charging the correct taxes on every stay?
If your answer was, “I think so…” you’re not alone—and that uncertainty could cost you.

Guest tax laws for small hotels in New Jersey can be confusing, especially when state, local, and platform-specific rules overlap. But getting them wrong could mean stiff penalties, back taxes, or even a damaged reputation with your guests.

In this guide, we break down everything you need to know about guest tax compliance in NJ—from what taxes apply to how to track and remit them. Whether you’re managing a charming inn in Pitman, a seasonal guest house in Cape May, or a boutique hotel in Woodbury, this article is your roadmap to confident compliance.

What Are Guest Taxes in New Jersey?

Guest taxes—also known as occupancy taxes, lodging taxes, or transient accommodation taxes—are charges collected by lodging operators and paid to the state (and sometimes local municipalities) for each guest stay.

These taxes help fund tourism, local services, and state infrastructure. If your property offers short-term accommodations (less than 90 days), you’re likely required to collect and remit these taxes.

Who Needs to Comply?

Small hotels and motels
Bed and breakfasts (B&Bs)
Short-term rentals (Airbnb, Vrbo, direct booking)
Inns, vacation homes, cabins

The 3 Types of Lodging Taxes You Might Owe

Let’s break it down. Here are the three common taxes your guests might be paying:

1. NJ State Sales Tax (6.625%)

This applies to all short-term lodging stays under 90 days. It’s calculated on the total room rate (including cleaning and amenity fees if charged separately).

2. NJ State Occupancy Fee (5%)

An additional fee for hotel-like accommodations. The fee is automatically owed unless your municipality is exempt (more on that next).

3. Local Municipal Occupancy Tax (up to 3%)

Some towns in NJ also impose a local occupancy tax—up to 3%. The rate and requirements vary by town, and not all municipalities participate.

Tax Type	Rate	Applies To
NJ Sales Tax	6.625%	All short-term lodging
State Occupancy Fee	5%	Hotels, B&Bs, motels
Municipal Occupancy Tax	0–3%	Depends on the town (e.g., Sewell = 3%)

Exemptions and Exceptions

There are a few important situations where guest tax laws may not apply:

Long-Term Stays: Guests staying 90 days or more continuously are considered residents—not subject to tax.
Government Agencies: Lodging billed directly to federal, state, or municipal agencies may be tax-exempt.
Certain Airbnb Bookings: Airbnb often collects and remits NJ lodging taxes on your behalf—but not always. Check your account settings and payout summaries.

💬 Local Tip: Gloucester County municipalities may have different rules than shore towns like Atlantic City. Always verify exemptions with your municipal tax office.

How to Register and Remit Lodging Taxes in NJ

Step 1: Register Your Business

Visit the NJ Division of Revenue and Enterprise Services to register as a lodging provider.

Step 2: Set Up Sales & Use Tax Accounts

This allows you to collect sales tax and occupancy fees correctly.

Step 3: File Regular Returns

Frequency: Monthly or quarterly, depending on your revenue.
Method: Online through NJ Sales & Use Tax filing portal.

TMD Accounting’s Sales Tax Services for NJ Businesses

🛑 Common Mistake: Forgetting to remit municipal occupancy fees separately if your town requires it.

What to Track to Stay Compliant

Keeping detailed records isn’t just good practice—it protects you in case of an audit.

📋 Track the Following:

Guest name, check-in/check-out dates
Rate charged and total tax collected
Exemptions with documentation
Amounts remitted and filing dates

Stay Compliant, Stay Confident

Tracking guest taxes in New Jersey can be overwhelming—but it doesn’t have to be. Our free checklist, “What NJ Lodging Operators Must Track for Guest Taxes,” simplifies everything you need to stay audit-ready and compliant with state and local tax laws.

Whether you’re running a cozy B&B in Cape May or a boutique inn in Gloucester County, this printable tool will help you:

✅ Stay organized
✅ Avoid costly filing mistakes
✅ Keep accurate, audit-proof records

Download your copy now and take the guesswork out of guest taxes.

Perfect for small hotel owners, B&B managers, and short-term rental hosts across NJ.

📌 Brought to you by TMD Accounting – trusted by New Jersey lodging businesses for expert tax guidance.

What NJ Lodging Operators Must Track for Guest Taxes

Best Software to Help Automate Compliance

Manual tracking is time-consuming and error-prone. Consider tools that integrate with your booking system:

Recommended Tools:

Lodgify – Booking engine + tax calculations
Cloudbeds – PMS with automated local tax tracking
QuickBooks Online – Connects to most hospitality software for automated sales tax accounting

🧩 Bonus: Use integrations or calendar reminders to never miss filing deadlines again.

Why Work With a Local NJ Accountant?

Even the best platforms won’t catch every nuance. Municipal codes, NJ tax updates, and audit defense all benefit from local insight.

A South Jersey-based accounting firm like TMD Accounting can help you:

Understand your exact filing obligations
Avoid penalties or late fees
Prepare accurate, audit-proof records
Make sure you’re not overpaying or undercharging

Contact TMD Accounting for NJ Lodging Tax Help

Conclusion: Master Guest Tax Laws with Confidence

Running a B&B or boutique hotel in New Jersey is hard enough without having to worry about tax fines or legal letters. By understanding which guest tax laws apply, keeping excellent records, and getting the right help, you can turn a confusing topic into a well-oiled part of your business.

🎯 Want help simplifying your lodging tax setup?
Schedule a call with TMD Accounting today and let us help you stay compliant, profitable, and stress-free.