Ah, Tax Day—the world’s least obvious food-related holiday. Think about it: Are you celebrating a sizable refund? Odds are you’ll splurge a bit in celebration the next time you’re out to eat. Bottom line took a hit this year? You may feel the urge to smother your dismay with a double bacon cheeseburger.
But food and taxes overlap in other ways besides emotion-driven eating. After all, food itself is subject to state tax laws. In an effort to bring in additional revenue without raising taxes across the board, many states have drawn unquestionably odd dividing lines around what food is taxable and what food is exempt. So to celebrate Tax Day—and the food that sees us through it—here are our favorite wacky facts about food taxes in the U.S.
Hot Vs. Cold
When determining which foods should be taxable, legislators frequently rely on two simple distinctions: whether the food is “prepared” or “unprepared,” and and whether the food is hot or cold. Hot, prepared foods (like restaurant meals) are generally taxable, while cold, unprepared foods (like grocery items) are generally tax exempt. But these seemingly simple distinctions have led to some bizarrely complicated real life applications.
In New York, for example, a whole bagel is tax exempt. However, should you request your bagel sliced, toasted, schmear’d, or generally altered in any way, you now owe an 8 cent sales tax. Similarly, if you buy a microwave burrito at a convenience store and use the store’s microwave to heat it up yourself, it’s tax exempt. But if the clerk pushes the microwave’s button, be prepared to pay extra. And if you buy pre-packaged macaroni salad from the grocery store cold case, it’s tax exempt. But if you scoop it yourself from the self-serve salad bar, get ready to shell out.
For Here Vs. To Go
As if the hot-cold distinction doesn’t make food taxes confusing enough, where you intend to eat your food sometimes matters just as much as the nature of the food itself. Perceptive customers of fast food restaurants in states like Ohio, for example, might notice that the same exact meal costs more when ordered and eaten inside the restaurant than when ordered at the drive-through. That’s because food consumed on-premise is taxable, but food consumed off-premise is not. And that bagel back in New York? Even if you politely declined the shop’s offer to slice, toast, and schmear it, you’ll still pay sales tax if you eat “for here” rather than “to go.”
The on-premise / off-premise distinction doesn’t always offer clear-cut guidelines on whether food is taxable, either. For instance, vending machine snacks offer convenient treats for captive audiences—hotel guests, employees on break, family camped out in the hospital waiting room, et cetera. But in states like California, while fresh fruit bought at a grocery store or farmers’ market is tax exempt, that banana bought from a vending machine will cost an extra 33% in sales tax.
Though most grocery items, as previously mentioned, are tax exempt, some states have enacted junk food-specific taxes aimed at curbing unhealthy eating habits. Just head to the register with a cart full of sweets in states like Washington, Colorado, or Illinois and you’ll see their candy tax in action—though perhaps not as consistently as you’d imagine. While Starbursts are taxable, for example, Twizzlers are not. And Three Musketeers are taxable, but Milky Ways are not. Reese’s Peanut Butter Cups? Taxable. But Kit Kats? Take a guess.
Blame this curious inconsistency on a quirk of candy taxonomy. The Department of Revenue defines candy as made with “sugar, honey, or other natural or artificial sweeteners combined with chocolate, fruits, nuts, or other ingredients or flavorings and formed into bars, drops, or pieces.” But the ingredient that’s most crucial in determining whether candy is, well, candy… is flour. Simply put, if the product lists flour as an ingredient, it’s not taxable as candy—meaning you can still indulge your sweet tooth while dodging sales tax like a champ if you just select your treats strategically. Hint: A regular Hershey’s Milk Chocolate Bar is taxable. A Hershey’s Cookies ‘n’ Creme Bar is not.
In Maine, they’re so wild for wild blueberries that they’ve made the fruit their official berry. It’s a fitting honor, though, considering Maine produces 99 percent of the blueberries in the U.S. But this blueberry bonanza doesn’t come without a cost; the state has implemented a ¾ cent per pound blueberry tax for anyone who grows, purchases, sells, processes, or otherwise handles the tasty blue treats. This tax funds research efforts to keep Maine’s offering competitive among other blueberry-producing regions—therefore guaranteeing Maine blueberries a spot in smoothies, pies, and compotes all across America.
The mobility of food trucks is hugely convenient for hungry customers. But that same mobility is a lot less convenient for food truck owners—at least when it comes to calculating sales tax. The sales tax charged by one individual food truck may actually vary over the course of a single day—something brick-and-mortar restaurateurs certainly can’t claim. That’s because a food truck’s route could easily span more than one tax district, requiring it to claim perhaps 7% at its lunch stop but 8% at dinnertime one town over.