Thanksgiving: Weird sales tax rules

Hard to believe Turkey Day is here again. Harder still to believe some of the strange sales tax laws that come with it.

Those laws depend on where you’re eating. So as you plan to arrive at your family’s early, marvel that the Detroit Lions are actually good and get ready to send the stuffing around again, chew on these sales tax considerations associated with the feast.

Most of the food

The turkey you cook at home, the seasoned bread cubes and the potatoes and the canned pie filling: Groceries are pretty much the simple part for sales tax and Turkey Day. All but 11 states no longer levy a statewide sales tax on groceries, though many local communities nationwide do. The states are Alabama, Arkansas, Hawaii, Idaho, Illinois, Kansas, Mississippi, Missouri, South Dakota, Tennessee and Utah.

The tax on groceries has become a political powder keg in times of inflation, and of those 11 states, five impose a reduced rate and others are preparing to eliminate sales tax on groceries (Oklahoma did so in August).

One Thanksgiving staple is under attack by the sales tax authorities, sort of: cranberries. Debate has raged for a long time in states such as Wisconsin whether dried cranberries (not the kind made into sauce) are dried fruit, which is largely not taxed, or candy, which does incur sales tax in many states.

If you plan to bring goodies to Turkey Day, desserts are especially liable to sales tax. Make the pie (or the turkey or anything else edible on the table, for that matter) and you won’t pay sales tax. Prepared food, on the other hand, is usually taxed, like in New York, where taxable items range from a tray of fruit and veggies to that platter of cookies (but not the bag of cookies – so drag down an old plate and arranging them yourself to save the sales tax).

All the trimmings

Couple of other items you want to be ready to pay sales tax on:

• That Chardonnay or Pinot Noir you heard goes great with turkey is taxable in many states.
• Skipping the cooking and eating your turkey dinner in a restaurant generally comes with sales tax (but not if you get it to go in Ohio). Local sales tax can also be stiff in restaurants.
• Skipping the cooking and having your dinner sent right to your doorstep by a service like Blue Apron? Your local food taxability rules apply and can depend on whether the food is prepared or how it’s packaged.
• On the road for the holiday? Certain travel-related services, such as lodging, can be taxable in some states; online booking services have long battled various states in the courts over sales tax. And a host of federal taxes are usually baked right into the cost of an airline or other travel ticket.

Just be thankful there’s somebody you can turn to with sales tax problems. Contact TaxConnex to learn what it means when sales tax is all on us – and off your plate.