Exploring Strange State Taxes That Might Surprise You

When it comes to sales tax, we’re often aware of the standard rates that apply to our everyday purchases. However, there are numerous lesser-known taxes that often fly under the radar. These sneaky charges can catch consumers off guard, leaving them surprised with the final bill. A closer look at some intriguing sales taxes showcases the diverse – and downright peculiar – nature of the tax regulations in different jurisdictions.

• Bagel Tax: Some jurisdictions have implemented specific taxes on prepared or ready-to-eat foods, including sandwiches. In New York, regardless of the type of bagel (sesame, whole wheat or everything) and the filling it contains (cream cheese and lox, anyone?), all of them are subject to tax. This means that New Yorkers who order their bagel sliced or toasted will be charged sales tax since the bagel is prepared to eat. If you want to save on the tax, order an unsliced bagel, which is considered a grocery item and not subject to tax (bizarre, I know!).
• Coffee Cup Lid Tax: In Colorado, non-essential packaging, including cup lids and straws, is taxed an extra 2.9%. (These seem pretty essential to me when driving on those slick mountain roads.)
• Exceptional Tree Deduction: While you live in an island paradise, preserving Mother Nature’s beauty is high priority. That’s why Hawaii offers a tax deduction of up to $3,000 every three years for individuals with “exceptional trees.” The aim is to help property owners cover the maintenance expenses on those trees possessing significant historical or cultural value, displaying qualities such as age, rarity, location, size, esthetic appeal, or endemic status. (Ahh, now dreaming of laying under an exceptional tree in Hawaii – I think I need a vacation.)
• Candy Tax: Those who live in Illinois and have a sweet tooth may like this one. The state taxes candy at its regular 6.25% sales tax except when the candy contains flour, in which case the tax is reduced to 1%. This means that candy bars like Twix or Snickers (better grab one!), which contain flour, are subject to six times less tax.
• Hot Air Balloon Tax: In Kansas, it can cost you 6.5% in state sales tax to ride a tethered balloon because it is deemed an amusement ride. On the other hand, if the balloon is untethered, your ride is considered transportation and will not be taxed. (I’m scared of heights and won’t be doing either, thank you.)
• Wild Blueberry Tax: Maine is famous for its wild blueberries and is by far the largest producer within the U.S. So, it’s no surprise then, that per state statute there is a 1.5 cent per pound levy on all wild blueberries processed within the state. Additionally, the same tax applies to unprocessed wild blueberries that are shipped outside the state’s borders. (Saving money tip: Avoid blueberry pie in Maine.)
• Fruit Vending Machine Tax: Fruit is not something typically subject to sales tax. But in California buying fruit from a vending machine will incur a whopping 33% tax. (Only in California would someone think to buy fruit from a vending machine.)

Exploring the realm of hidden sales taxes sheds light on state taxation’s sometimes strange and perplexing nature. As consumers, staying informed about these hidden taxes can help you navigate purchases more effectively and avoid unexpected financial surprises. Understanding the nuances of the many state tax laws can help you make well-informed decisions and ensure you’re not caught off guard by these lesser-known charges.

For any questions regarding strange state taxes, contact Alan Goldenberg, Principal and Leader of the State and Local Tax and Tax Controversy Groups, or your Anchin Relationship Partner.