Are Christmas trees taxable?

by TaxJar November 1, 2020

It’s that time of year when we head out of the lot to pick the perfect Christmas tree – or head over to the nearest store and buy a pre-lit one. I don’t blame you. Untangling these little guys is never fun.

But all this Christmas tree purchasing begs one question:

Do you have to pay sales tax on your Christmas tree?

The short answer is (almost always): yes.

Your Christmas tree is “tangible personal property.” Tangible personal property is almost always taxable. The only time it isn’t taxable is when there is some sort of exemption. Sales tax exemptions vary from state to state and you can find links to what each state considers sales tax exempt by choosing your state on this sales tax map.

Speaking of sales tax exemptions, you’ll notice that states tend to give exemptions to industries they are trying to support. For example, many states in the Midwest exempt agricultural equipment. Many other states, who are trying to prevent losing manufacturing to other states are countries, make manufacturing equipment sales tax exempt.

Are the times changing?

In 2016, the state of Mississippi bucked tradition and passed a law making Christmas trees a non-taxable transaction. But the law included some caveats. Christmas trees in Mississippi are only non-taxable if they are cut and sold at the same time and place. 

For example, a Mississippi farmer who grows Christmas trees and then allows buyers to choose, cut and purchase their preferred tree from the farm does not have to charge Mississippi sales tax when selling Christmas trees.

But a retailer who purchases and cuts a selection of Christmas trees from a farm and then resells them in his own Mississippi location (think the trees you see in the parking lot at Big Box stores during the holidays) would be required to charge Mississippi sales tax on Christmas trees.

The fight for tax-free Christmas trees

Two other states have fought hard to eliminate the sales tax on Christmas trees, with one Pennsylvania state representative going so far as to name his bill the “Don’t Be a Scrooge” bill. The Pennsylvania bill, which never gained traction, would have exempted Christmas trees sold on Christmas tree farms from sales tax.

Lawmakers in neighboring New York also proposed eliminating the sales tax on Christmas trees, though their tax break would have been more like an extended sales tax holiday. In the New York proposal, evergreen products like Christmas trees would have been non-taxable during a “Go Green” sales tax holiday. 

In conclusion, as it stands you’ll most likely find yourself paying sales tax on your Christmas tree this year. That is unless you choose to buy your Christmas tree from a farm in Mississippi. Maybe in the future the taxman – at least in New York or Pennsylvania – won’t be such a Grinch.

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