TaxByte: New Jersey Clarifies Sales Tax Rules on Tariff Markups | TaxValet

The New Jersey Division of Taxation has clarified that when sellers pass along federal tariff costs to customers—even as separately stated charges—those costs are still subject to New Jersey Sales Tax. This update may significantly impact pricing strategies for businesses that import goods and itemize tariff costs on invoices.

Importers and Retailers in New Jersey Must Adjust for Taxable Tariff Markups

Businesses involved in importing and selling goods—especially those in retail, wholesale, and distribution—should take note of this clarification. If your pricing model includes a separate line item for tariff costs on invoices, that charge is now explicitly taxable. Even though tariffs are federal in nature, New Jersey treats any cost passed to the buyer as part of the product's "sales price."

This change affects how businesses need to calculate and collect sales tax on transactions involving imported goods.

What’s Changing: Tariff Markups Are Now Clearly Part of the Taxable Sales Price

Background:

Tariffs are fees imposed by the federal government on imported goods. These costs often get passed down through the supply chain—from importers to distributors, and eventually to end consumers.

New Jersey’s Clarification:

In its latest guidance, the New Jersey Division of Taxation reaffirms that:

• The term “sales price” includes all charges related to the sale of a product.
  
  
• This includes the seller’s costs, taxes, and any separately stated service or delivery fees.
  
  
• Even if a seller itemizes the tariff fee separately on the invoice, it is still subject to New Jersey Sales Tax.
  
  

Example:
If a furniture retailer imports products and passes along a $50 tariff charge on top of the base price, the entire amount (including the $50) is taxable—even if listed as a separate line item on the bill.

What Businesses Should Do Next to Stay Compliant

Determine If You’re Impacted:

• Do you import goods subject to federal tariffs?
  
  
• Do you include tariff costs as line items on invoices to customers?

If yes to either, you may be under-collecting sales tax and need to reassess your invoicing practices.

Action Steps for Compliance:

• Review your current sales tax collection practices and invoice formats.
  
  
• Consult with your tax advisor or compliance team to ensure all applicable charges are included in the taxable sales price.
  
  
• Consider updating point-of-sale systems and accounting tools to treat tariff line items as taxable.

How TaxValet Simplifies Compliance with Changing Tax Laws

Navigating evolving tax rules—like New Jersey’s guidance on tariff markups—can be a challenge. If you're a TaxValet client, you don’t have to worry about interpreting dense tax language or risking non-compliance. We stay ahead of changes for you, update your filings accordingly, and ensure your sales tax processes remain accurate and stress-free.

Want to be proactive about compliance? Reach out to us for a free consultation.