New Jersey businesses that are increasing product prices because new federal tariffs have raised their own costs are being reminded by state officials that tariff markups are subject to sales tax, even if the tariff appears as a separate charge on the customer’s bill.
New Jersey assesses a 6.625% sales tax on sales of most tangible personal property, specified digital products, and certain services unless specifically exempt under New Jersey law. In its June Tax Alert publication, the Division of Taxation noted that sellers must collect sales tax on all tariff-related markups and gave taxpayers the following example.
“If the U.S. government imposes a tariff on furniture imported from another country, that tariff is passed along to the furniture seller. A seller may increase the sales price of the furniture sold to customers to maintain its profit margins. If the seller marks up the price of the furniture, even if it is billed as a separately stated fee, the increased cost and/or fee is subject to sales tax since it is part of the taxable sales price.”
Although the U.S. Court of International Trade on May 28 blocked President Trump’s sweeping global tariffs that he ordered under the International Emergency Economic Powers Act (IEEPA), a federal appellate court quickly issued an injunction that temporarily allowed the tariffs to remain in place while the legal battle continues. The appellate court gave the Trump administration until today (June 9) to file its legal briefs.
The court case affects only the tariffs imposed by presidential executive order using the IEEPA statute. Tariffs on steel and aluminum products, including cars, are not impacted because they were issued under a separate national security provision of the Trade Expansion Act of 1962 (known as Section 232 tariffs).
