Prohibits credit and debit card interchange fees from being applied to sales tax and gratuity.

2026-2027 Regular Session Introduced by Roy Freiman

The bill bans passing credit/debit card interchange fees into the sales tax base or gratuities, requiring tax calculations on the actual sale price only.

Introduced, Referred to Assembly Financial Institutions and Insurance Committee

Purpose and intent

A 5014 seeks to prohibit the application of credit and debit card interchange fees to sales tax and gratuity in New Jersey.

In essence, it aims to ensure that sales tax and gratuities are calculated and charged based on the price of the goods or services, without adding interchange-related costs to these amounts.

Key provisions and changes

Prohibition on pass-through of interchange fees: The bill would bar merchants from imposing credit or debit card interchange fees as part of the sales tax base or as additional charges related to sales tax.

Treatment of gratuities: The bill stipulates that gratuities should not be inflated or manipulated through interchange fee structures; any reliance on card networks to collect tips would be constrained to standard tipping practices rather than fee passthroughs.

Clarification of tax calculations: The measure would require sales tax to be calculated on the actual sales price of items, independent of any card processing fees that merchants incur.

Scope: Applies to transactions where sales tax is levied, and covers both consumer purchases and related gratuities associated with service charges.

Who and what is affected

Merchants and retailers who accept credit and debit cards for purchases in New Jersey.

Consumers who pay sales tax and gratuities on card-based transactions.

Card processing networks and payment processors, to the extent that their interchange fees would be constrained from being passed through to tax bases or tips.

Procedural and timeline aspects

Sponsorship: Co-sponsored by Roy Freiman.

Status: The summary does not include specific dates for committee hearings, amendments, or final floor action. As a bill introduced in Session 222, it would progress through the usual stages of New Jersey legislation (committee review, potential amendments, and floor votes in both houses, followed by gubernatorial action).

Implementation: If enacted, effective dates and any transitional provisions (e.g., phased implementation or applicability to new transactions) would be specified in the final text or accompanying fiscal analysis.

Potential impact and considerations

Administrative clarity: Vendors would need to ensure their sales tax calculations exclude interchange-related pass-throughs, reducing ambiguity about how tax bases are determined.

Consumer pricing: The policy could reduce the indirect cost burden on consumers by preventing the shifting of card processing costs into tax and gratuity calculations.

Economic effects: Merchants might experience changes in their gross margins if interchange fees are not recoverable through tax bases or tips, though the bill’s impact would depend on current pricing and passthrough practices.

Compliance: Merchants and tax administrators would require guidance on compliant reporting and any necessary amendments to point-of-sale systems to separate tax calculations from processing fees.

Note: For a complete understanding, refer to the bill’s full text, fiscal impact statement, and any amendments adopted during the legislative process.

Bill