The U.S. federal tax code, ratified in 1913, started at around 27 pages, but is now estimated to be 6,571 pages for the 2021 tax year. If the dense language has you frustrated, you’re not alone. Tax laws can be complicated, whether they’re federal or state. There are many confusing laws with seemingly undecipherable sentences or weird distinctions between what is and is not taxable — the difference can seriously impact your money.
We all know we need to get our taxes wrapped up before the April 18 deadline, but if you feel like procrastinating, let’s take a break from the serious tax stuff. Instead, enjoy a look at some weird tax laws and exemptions in every state.
Alabama: Taxing playing cards
Alabama imposed a 10 cent tax on every deck of playing cards with 54 or fewer cards, along with an annual licensing fee of $2 to stores selling the cards. The tax was repealed in 2015.
Alaska: A whale of an exemption
In Alaska, whaling captains recognized by the Alaska Eskimo Whaling Commission may deduct up to $10,000 per year on maintaining whaling boats, supplying food for the crew while whaling, and storing and distributing anything caught.
Arizona: Is it a cube or a block?
Ice in Arizona (and other states) could cause tax confusion. If you purchase ice cubes (like in mixed drinks), it’s considered food and isn’t taxable. But if you buy a block of ice to keep a cooler cold, the vendor will pay a transaction privilege tax, which is passed along to consumers.
Arkansas: Au natural
Arkansas requires a gross receipt tax of 6.5% on specific services, including tattoos, body piercings, and electrolysis, along with pet grooming and pool cleaning.
California: Taxes on fruit from vending machines
Fresh fruit sold in grocery stores in California is not subject to tax, but if you get your apple slices from a vending machine, you’ll pay a 33% tax, meaning for every $1 spent at a vending machine, you’ll pay an additional 33 cents.
Colorado: Coffee lids not required
In Colorado, to-go coffee cups are considered essential packaging, which isn’t taxable, but non-essential packaging, including straws, toothpicks, cup sleeves, and yes, even lids, is subject to a 2.9% tax. Make sure you watch out for those potholes.
Connecticut: Personal safety wins
In Connecticut, items such as bike helmets, car seats, harnesses, life vests, or even equipment worn by professional athletes or coaches aren’t subject to sales tax. That’s because they fall under an exemption for clothing or personal safety equipment worn by any employee during employment. The primary rule is that items have to be wearable to be exempt. You typically can’t claim anything you can’t carry on your body.
Delaware: Corporate heaven
Delaware is usually named one of the tax-friendliest states in the country because it has a low corporate income tax rate of 8.7%, and is one of five states that doesn’t have any state or local sales tax. It does, however, have a gross receipt tax on businesses providing goods or services in the state, ranging from 0.0945% to 1.9914%.
The “greenbelt law” in Florida has historically been used as a loophole to pay less in property taxes. If pieces of your property were designated for agricultural use, your tax bill would be lower. Over the past few years, this loophole was tightened, with agriculture having a stricter definition.
Georgia: To itemize or not to itemize
The Georgia legislature is changing a long-standing tax law that says you must claim itemized deductions on your state taxes if you claim itemized deductions on your federal income tax. According to the Tax Foundation, “… itemizers could no longer deduct Georgia income taxes in arriving at taxable income, though they would benefit from the lower rate that it helps offset.”
Hawaii: The exceptional tree deduction
Designated “exceptional trees” in Hawaii provide a tax deduction of up to $3,000 every three years for maintenance costs. What makes a tree exceptional? According to the Hawaii tax code, “[a] historic or cultural value, … age, rarity, location, size, esthetic quality, or endemic status ….”
Idaho: Taxing digital entertainment
In 2014, Idaho changed its tax law to make digital entertainment, including ring tones, e-books, movies, and music sales, taxable, but cloud-based or downloaded computer software that didn’t have a physical disk became tax-exempt.
Illinois: Candy lovers beware
Illinois taxes candy at its regular sales tax rate of 6.25% except when the treat includes flour. In that case, it’s considered food and exempt from state sales tax. For example, a plain chocolate bar will cost 6.25% more than a bar containing flour, like a KitKat or Snickers.
Indiana: Sweet tooth danger
Indiana has the flour/no flour distinction, but it also taxes based on whether candy is sold in bars, drops, pieces, or as a whole. For example, marshmallows are taxable because they are sold in pieces, whereas a jar of marshmallow creme is not sold as a bar, drop, or piece, so it falls under non-taxable food items.
Iowa: First, you need a pumpkin
A 2007 Iowa law distinguishes pumpkins used for food and those used as decorations. If the pumpkin is a varietal used for pie, purchased with food stamps, or if the buyer has specific tax-exempt paperwork, the pumpkins are tax exempt. Anything used or advertised as a decoration, like jack-o’-lanterns, is subject to total sales tax.
Kansas: Flying high
If you decide to take a hot air balloon ride in Kansas, you’ll need to determine whether the balloon stays tethered to the ground or if it flies free. If it’s tethered, your ride is considered an amusement and subject to 6.5% sales tax, plus local taxes. Untethered, the ride is considered transportation and not taxable.
Kentucky: Horse racing and stud fees
The Kentucky Derby is one of the bluegrass state’s biggest draws, so it’s not surprising that state tax law would include a 6% sales tax on thoroughbred stud fees. All collected money goes to three separate funds that incentivize horse breeding in Kentucky.
Louisiana: Tax holiday
Every Labor Day weekend in Louisiana, a second amendment sales tax holiday provides “a local sales and use tax exemption on any consumer purchase of firearms, ammunition, and hunting supplies.” The tax exemption even includes lawn chairs explicitly purchased for hunting.
Maine: Blueberry tax
Blueberries are serious business in Maine, and the government taxes them accordingly. You’ll pay a tax of 1.5 cents per pound on any wild blueberries. The processor that receives the berries straight from the field is responsible for reporting and paying the tax, which is passed along to consumers when berries hit grocery shelves.
Maryland: Sewer tax
A $5 per month fee on sewer bills, or a $60 annual fee for septic systems, is charged in Maryland to offset the previous damage done to the Chesapeake Bay. The fees directly support the Atlantic Coastal Bays Restoration Fund.
Massachusetts: Holiday cheer
If you’re planning to bring an alcoholic gift into Massachusetts, you’ll need to apply for a special permit and pay a fee. Depending on the alcohol, you could pay anywhere from 11 cents (for malt beverage) up to $4.05 (for spirits) per gallon imported into the state.
Michigan: Prepared food vs. groceries
In Michigan, as in other states, the difference between hot food and groceries gets specific, and whether food is provided with a utensil is often the difference between taxable and tax exempt. For example, a bag of popcorn served hot might be taxable, whereas popcorn served unheated, in a sealed bag, and purchased at the same place, may not be.
Minnesota: Fur tax
In Minnesota, a fur coat or jacket could cost you extra. If a coat has fur as the main component, it’s subject to a 6.5% sales tax, including shipping and applicable charges. The tax does not include leather or suede.
Mississippi: Reforesting tax credit
In Mississippi, a tax credit of up to 50% of the “cost of approved hardwood and pine reforestation practices” is offered on private, non-industrial land. Landowners must have a registered forester complete a plan for reforestation before being eligible for the tax credit, and orchards, Christmas trees, or ornamental trees don’t qualify.
Missouri: The bachelor tax
Originally enacted in 1820, the Missouri bachelor tax stated that unmarried men between 21 and 50 owed a $1 per year tax, the equivalent of about $23 today. The tax was initially meant to encourage marriage and increase the population of the then-territory (Missouri became a state in 1821). After much outrage, the law was repealed in 1822.
Montana: Registered agents
Montana has turned into a haven for luxury car owners looking to avoid hefty registration fees and taxes. Companies will create an LLC for you to purchase the car and act as your registered agent so you can title and register the vehicle in Montana. If you decide to look into this, remember that it may have insurance implications and could be a red flag to your home state’s Department of Motor Vehicles.
Nebraska: Utensil tax
In Nebraska, food may only be taxable if the seller hands the customer utensils instead of making them available on a counter. If the seller hands the customer utensils, it’s taxable. If the seller has utensils available on the counter, whether it’s taxable is calculated using a formula of the percentage of prepared food sold in relation to total sales.
Nevada: Body oil for Mr. Olympia
Body oil, as used for bodybuilding competitions like Mr. Olympia, is an allowable deduction as a business expense in Nevada (and other states), which has hosted the competition since 1999. A tax court ruled that the oil was a reasonable business expense, but a special diet and supplements were not.
New Hampshire: Excavation tax
Yep, New Hampshire will charge you taxes to move dirt. If you move more than 1,000 cubic yards, your tax will be 2 cents per cubic yard. This tax mainly applies to industrial uses, but the state says that the tax applies even if you give away the dirt. Anyone planning to move a large amount of earth must first file a Notice of Intent to Excavate.
New Jersey: New car tax
In New Jersey, the sales tax rate is 6.625%, and as of 2006, new cars costing more than $45,000 or having an EPA fuel-mileage average of 19 or below will also pay an additional, one time, .04% in sales tax.
New Mexico: No taxes when you turn 100
New Mexico knows how to do milestone birthdays! As you think about how to manage your money in retirement, taxes can be a big worry. When you reach 100 in New Mexico, you are exempt from state income tax as long as you’ve been a resident for more than six months, a resident as of December 31, and not listed as a dependent on anyone else’s tax return.
New York: Bagel tax
Bagels are a big deal in New York, and the way you buy them could cost you more than expected. If you get bagels uncut, they are considered tax-exempt, but if you ask for them sliced, toasted, or with cream cheese, you’ve altered it, and an 8 cent tax is added per bagel.
North Carolina: Pet tax
Several counties in North Carolina collect a pet tax on our furry friends. In Chapel Hill, for example, you must register your pet if they are four months or older and pay $10 for spayed or neutered animals or $30 if your pet is physically intact.
North Dakota: The show must be taxed
North Dakota adds a 5% tax on composers who sell, license, or are otherwise compensated for the music they create for opera, musicals, or other live shows, payable through gross receipts. The composer usually pays a performance rights organization such as BMI, which remits the tax to the state of North Dakota.
Ohio: Hair tax
According to the Ohio Department of Taxation, “human organs, bones, tissue, blood or blood products…. are not subject to sales tax.” However, “human hair, animal organs, or other products not of human origin for transplantation or implantation…. are subject to the sales and use tax.” So artificial joints to replace knees or hips are subject to a 5.75% sales tax, whereas a kidney transplant is not.
Oklahoma: Furniture tax
Although Oklahoma’s property taxes are among the lowest in the nation, some counties charge a tangible personal property tax (TPP), so items like equipment or furniture may be taxable. Several states also have a TPP tax, but they usually apply to businesses and exclude items not used to generate income. You may have to pay taxes on your personal furniture or jewelry in these Oklahoma counties.
Oregon: Pot taxes
Marijuana taxes aren’t new, and as soon as states legalize it, they generally tax it. In Oregon, recreational pot is taxed at 17% plus up to 3% local tax, though medicinal marijuana is usually tax exempt at both the state and local levels.
Pennsylvania: Flood tax
Alcohol in Pennsylvania incurs an 18% tax, but for an interesting reason. As a result of a devastating flood in 1936, a temporary tax on alcohol was created to help rebuild Johnstown. The tax served its purpose and helped rebuild the city, but it was never repealed and is still in place.
Rhode Island: Happy face
Rhode Island includes emojis in their RI-1040 tax form. Box 16 features a smiley face to let you know you’re getting a refund, whereas box 15c has a frowning emoji because you need to make a tax payment.
South Carolina: Joint exemption
In South Carolina, unmarried couples who attend a premarital preparation course and get a South Carolina marriage license proving they completed the course are eligible for a one-time tax credit of $25 per person or $50 per couple.
South Dakota: Tax haven
South Dakota is another state that doesn’t have a personal income tax, nor does it have an income tax for corporations, and the sales tax is only 4.5%. South Dakota is often mentioned as a tax haven for wealthy people and businesses because of its low tax rates.
Tennessee: Litigation taxes
If you have to go to court in Tennessee, look out for the litigation taxes. If you’re in civil court, the plaintiff is responsible for the tax. In criminal court, the defendant is liable for it if they are found guilty. There are a variety of rates and fees that could apply and they are based on the charge and the court exercising jurisdiction.
Texas: Everything’s bigger
If you go to Texas during its annual sales tax holiday and pick up a shiny belt buckle, be aware you’ll probably still have to pay sales tax. Although cowboy boots are considered exempt during this period, belt buckles, bow
ling shoes, and fishing waders, among other things, are taxable.
Utah: Strip tax
In 2004, Utah passed a 10% tax on food, drink, and entry fees charged by strip clubs, along with applicable sales and use tax. In 2010, opponents challenged the tax in the state supreme court, but the tax was upheld and still applies.
Vermont: Street tax
Burlington, Vermont, charges a licensing fee for all street performers operating on main thoroughfares. There is also a provision in the city charter that states that the City Council can tax “common showmen, circuses, menageries, carnivals, and shows of every kind” as they deem necessary.
Virginia: Tax holiday redux
Several states have an annual tax holiday, usually timed with the back-to-school season, to make supply shopping easier for families. In Virginia, the holiday covers the usual pencils, notebooks, and binders, but also things like fur coats, girdles, and wedding apparel.
Washington: State tax
Washington does not currently have a state income tax, but during the Great Depression, voters approved an income tax to lessen the property tax burden on struggling farmers. Some business owners were against implementing the tax and challenged the vote in the state supreme court. The court ultimately deemed the law unconstitutional, and Washington never implemented an income tax.
West Virginia: Sparkler tax
If you decide to sell sparklers or novelties in West Virginia, you’ll need to acquire a Certificate to Sell Sparklers and Novelties Registration and pay a fee. A 12% safety fee on your total sales will also apply, as well as applicable state and local tax.
Wisconsin: Internet tax
Access to the internet used to be taxable in Wisconsin. Although that’s now illegal under federal law, Wisconsin was able to continue the tax until July 1, 2020. Today, Wisconsin does not charge sales or use tax on internet access but may still charge tax if internet service is bundled with other taxable items.
Wyoming: (No) candy tax
Wyoming is the last state without income tax and charges just 4% sales tax. The cowboy state is considered one of the tax-friendliest in the country and doesn’t charge tax on things other states do, such as candy, gum, and mints, which it classifies as food for tax purposes. However, takeout food, concessions, and prepared foods are still taxable.
State and local governments collected about $640.57 billion in general sales and selected sales tax in 2019. Additionally, the federal government collected more than $1.6 trillion in individual income tax. Given all the odd classifications and exemptions available, it’s no wonder doing your taxes can be frustrating and eat into your hard-earned money.
Consider this your friendly reminder that taxes are due on April 18, and if you need help, check out the best tax software. Although learning about these tax laws probably won’t help you finish your taxes, it may make you chuckle or inspire you to research the deductions or credits in your state.
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