Sales Tax Fundamentals
Get up to speed on the basics of sales tax
Are Valentines gifts taxable?
byNovember 1, 2020
Love is in the air…and emptying wallets. Consumers who want to show their love spend more than $21 billion every year to prove their affection with Valentine’s Day gifts.
For online sellers, that can mean a boon to sales in Q1. So, if Valentine’s Day is your online store’s time to shine, or if you’re simply still looking for that perfect Valentine, here’s what you need to know about sales tax and the most romantic of holidays.
Is Valentine’s Day candy taxable?
Whether or not you will pay sales tax on that box of chocolates depends on where your lovebug is located.
Candy is fully taxable in most US states, even in those states that otherwise consider grocery items non-taxable or taxed at a lower rate. This is partly due to political factors trying to discourage Americans from eating sugary snacks and sodas by not offering any extra incentive to purchase them. However, some states, like Arizona and Louisiana haven’t made such a distinction, and candy, like other food items, is non-taxable in their states.
Another interesting distinction is whether or not the candy you are buying for your sweetheart includes flour. Some states, like West Virginia, consider candy that contains flour to be a non-taxable grocery item while candy that does not contain flour to be taxable candy.
So will you pay sales tax on that box of Swiss chocolates? It truly depends on the state.
Psst! Do you sell candy? TaxJar just added a slew of new candy-related Product Tax Codes to the TaxJar API. So whether you sell rock candy or bubble gum or swizzle sticks, just code your product with the correct PTC and we’ll ensure you collect the correct amount of sales tax in every state on every bonbon.
Are flower arrangements taxable?
Since flower arrangements contain tangible objects — namely flowers and vases — they are generally taxable in most states. But how much sales tax to charge can get tricky when you are ordering flowers to be delivered to your Valentine.
If you go to the flower shop and purchase flowers, you’d pay the sales tax rate at that flower shop’s location. And the flower shop seller would charge the same sales tax rate to every customer who walks in the door and walks out with a bouquet.
But, if you order flowers online to be delivered to your Valentine’s doorstop, then the flower purveyor is required to determine the sales tax rate at your Valentine’s address. This is because sales tax is charged at the “point of sale” and the point of sale is wherever the final customer takes possession of the gift (in this case, the lovely vase of flowers.)
Why? Sales tax rates vary from state to state and even city to county. For example, the sales tax rate in a city may be 9 percent — a 4% state rate, 3% county rate and 2% city rate. While the sales tax rate in the unincorporated part of that county may simply be 7% – the 4% state rate plus the 3% county rate. Therefore, in order to avoid overcharging for flower delivery, the flower seller must be sure they are collecting the right amount of sales tax from every buyer, every time.
Sound difficult? That’s why we built TaxJar. With the TaxJar API, your store automatically collects the right amount of sales tax, no matter if a buyer lives in the city, in the unincorporated county, or in some odd special taxing district you didn’t even know about! Find out more about the TaxJar API here.
Is jewelry taxable?
Unlike many other Valentine’s Day presents on this list, jewelry is essentially taxable across the board. It’s a tangible object and is not exempt from sales tax due to being a “necessity.” While a piece of jewelry may seem necessary to win someone’s heart, any state’s Department of Revenue would beg to differ!
In fact, if you are purchasing jewelry for Valentine’s Day you may be in for some sticker shock. In Connecticut, watches or jewelry that sells for a price of $1,000 or higher are also subject to Connecticut’s “luxury tax.” Rather than charging the regular 6.35% across-the-board Connecticut sales tax rate on these expensive items, the state requires retailers to charge 7.75%. I guess it’s time to determine if your Valentine is worth the extra cost?
Luxury tax can also apply to other extravagant goods like fur coats, so be on the lookout when you’re spending the big bucks.
Are singing telegrams taxable?
While a singing telegram might not be the best idea during an airborne pandemic, perhaps a serenade under your partner’s window is on the table? In this case, the singing gift is likely considered a “service” when it comes to how states tax this transaction. In most states, services are non-taxable, though that has been changing in recent years as states try to find more ways to collect tax dollars.
As of this writing though, you probably won’t pay sales tax if you send a serenade to your Valentine!
No matter what you decide to purchase for your Valentine this year, we hope you pay the exact correct amount of sales tax.
Ready to automate your sales tax collection? To learn more about TaxJar and get started, visit TaxJar.com/product/