Impact of Tariffs on Sales and Use Taxes

Rödl & Partner Tax Matters Volume 2025-5, published April 2025​

In response to the new U.S. tariffs on their supply chain, some businesses are passing through applicable tariffs to customers as a separate line item or surcharge on invoices or receipts. In some states, this additional line item will be subject to sales tax.

 

Tax Base: Sales taxes are calculated on the amount of consideration paid for the transfer of title or possession of property or the provision of a taxable service. This amount is referred to as the “tax base” to which the rate of tax applicable at the receiving jurisdiction is applied. Additional fees, charges and some services can increase the amount of this tax base. Each state includes different items and definitions in their calculation of their tax base. Very few states have issued guidance specifically addressing tariffs, but statutes and regulations may already provide for the addition or exclusion of certain federal taxes.

 

Tariff Surcharges Typically Increase Tax Base: To assist clients in knowing which states will consider a tariff surcharge on an invoice in the tax base subject to sales tax, we have prepared a handy chart. Note that due to the broad definition of “sales price” in most states and assuming any exclusion for a federal excise tax would not apply to a tariff surcharge, most states would include a surcharge in a tax base. We are monitoring state guidance for any clarifications on this issue.

 

Not Applicable for Exempt Sales: Note that if a customer has provided a valid exemption certificate for the purchase of the product, the exemption is also valid for any tariff surcharge.

 

Monitor Supplier Sales Tax Charges: Just as your business may need to determine what is included in your sales tax base, your vendors are doing the same. Even if you only sell to exempt customers and are not concerned with the sales tax impact of a tariff surcharge, this is a good time to check your vendor invoices to ensure your vendors are also calculating sales tax correctly on invoices submitted to your business.

 

Use Tax Base May Differ: If sales tax has not been collected by a vendor for a taxable item and your business must self-assess and remit use tax, the use tax base calculation may not be the same as the sales tax answers shown in this chart. Because the tariff is a cost of the importer and the definition of the tax base can differ between sales tax and​ use tax in some states, results may vary. If you have this situation in a particular state and need assistance in calculating your use tax base, please reach out to your Rödl & Partner representative.

 

Click here​ to access the state chart on whether tariffs are included in the sales tax base