Sales tax by state: in which states is gift-wrapping taxable?
by December 6, 2016
The holidays are coming up, which means it’s time for businesses everywhere to figure out how to maximize their profits. One way many companies do this is by offering gift-wrapping services. However, you might not know that some states consider the service of actually wrapping a gift taxable.
Naturally, each state has its own rules and regulations when it comes to whether or not you should charge sales tax on gift-wrapping. Many don’t have the tax at all while others have strict guidelines on when a value-added service like gift-wrapping is and is not taxable. To help you out, we went through every state’s tax codes to find out which states you have to look out for.
If you look at this list and find that you need to collect sales tax on gift wrapping, be sure to set this up in your shopping cart. We have instructions on setting up gift wrap taxability on Amazon FBA in this FBA Sales Tax eBook.
Note: We’ve excluded the four states with no sales tax (Delaware, Montana, New Hampshire, and Oregon).
Alaska
Gift wrapping services are not taxable.
Alabama
Gift wrapping services are not taxable.
Arizona
Gift wrapping services are not taxable.
Arkansas
Gift wrapping services are not taxable.
California
Gift wrapping services in California ARE taxable, depending on the item bought. From the Board of Equalization website:
If you are wrapping products that you have sold in a nontaxable transaction, generally sales tax does not apply to your gift-wrapping charges. If you gift–wrap items that you did not sell or items that are taxable, all of your gift–wrapping charges–including charges for labor—are taxable. The quick reference table is intended as a general guide and can help you determine whether tax applies to your gift–wrapping charges.
Colorado
Gift wrapping services are not taxable.
Connecticut
Gift wrapping services are not taxable.
Florida
Gift wrapping services in Florida ARE taxable. From the Florida Administrative Code & Florida Administrative Register:
(a) The total charge for gift wrapping merchandise is subject to tax, whether charged by the seller of the merchandise or by any other person. Materials, such as paper, ribbon, bows, or tape, used in gift wrapping merchandise may be purchased tax-exempt by a dealer registered with the Department. The purchasing dealer is required to issue a copy of the dealer’s Annual Resale Certificate to the selling dealer at the time of purchase, as provided in Rule 12A-1.039, F.A.C.
(b) Tax is due on the materials used by the dealer in gift wrapping merchandise at no charge to the customer.
Georgia
Gift wrapping services are not taxable.
Hawaii
Gift wrapping services in Hawaii ARE taxable. While Hawaii does not have a sales tax per se, their “gross receipts tax” is basically the same.
Interesting to note: Hawaii has also been rated as having the highest amount of taxable services of any state.
Idaho
Gift wrapping services are not taxable.
Illinois
Gift wrapping services are not taxable.
Indiana
Gift wrapping services in Indiana are not taxable.
Iowa
Gift wrapping services in Iowa ARE taxable. The Iowa Tax Research Library has kindly outlined many different scenarios you might run into as an eCommerce seller.
Kansas
Gift wrapping services in Kansas ARE taxable according to the Kansas Department of Revenue website.
Kentucky
Gift wrapping services are not taxable.
Louisiana
Gift wrapping services in Louisiana ARE taxable, provided it’s a totally separate charge and not connected with the sales of the actual item. From the Sales & Use Tax Rules and Regulations page:
F. When gift-wrapping services are provided in connection with the sale of tangible personal property and no separate charge is made, no tax is due. When a separate charge in connection with the sale of tangible personal property is made for gift-wrapping services, the entire charge is considered to be a charge for the sale of tangible personal property and is taxable.
G. When the gift-wrapping service is not rendered in connection with the sale of the tangible personal property being wrapped, only the separately stated charge for gift-wrapping materials is subject to sales tax and the separately stated labor and service charge is not taxable. If no separation of charges is made, the entire charge is considered to be for the sale of tangible personal property and is taxable.
Maine
Gift wrapping services are not taxable.
Maryland
Gift wrapping services are not taxable.
Massachusetts
Gift wrapping services are not taxable.
Michigan
Gift wrapping services are not taxable.
Minnesota
Gift wrapping services in Minnesota ARE taxable. From the Minnesota Department of Revenue website:
The entire charge for gift wrapping is taxable even if the charges for the gift wrap and for the labor are separately stated.
Mississippi
Gift wrapping services are not taxable.
Missouri
Gift wrapping services are not taxable.
Nebraska
Gift wrapping services in Nebraska ARE taxable. From the Nebraska Sales and Use Tax Regulations page:
043.05 Any charge for a container, for wrapping an item, or filling a container, is taxable, except if the contents are sold at the same time and the contents are exempt, the charge is exempt.
Nevada
Gift wrapping services are not taxable.
New Jersey
Gift wrapping services are not taxable.
New Mexico
Gift wrapping services in New Mexico ARE taxable. From the Taxation & Revenue website:
Generally speaking, sales and leases of goods and other property, both tangible and intangible, are taxable. Unlike many other states, sales and performances of most services are taxable in New Mexico.
New York
Gift wrapping services are not taxable.
North Carolina
Gift wrapping services that are separately stated are not taxable. When included in the initial price, you’re technically being taxed on the items used (paper, ribbon, etc.). From the Department of Revenue website.
A. When a vendor gift wraps an item which he sells, the paper, ribbon and bow become a part of the sale of the item notwithstanding that the wrapping of the item may take place at the point of delivery thereof to the vendee or at one of the vendor’s wrapping stations or that the vendor may make a charge for gift wrapping the item. If a separate charge is made for wrapping, it is deemed to be for services performed in wrapping the item rather than a separate sale of wrapping material, and no sales or use tax will be due on the wrapping charge.
B. When an organization, as a means of raising funds, offers to wrap gift items which were purchased from other vendors, the organization is considered to be performing a wrapping service and no tax is due on the service charge. However, tax is due on the cost of paper, ribbon and bows purchased for use in the performance of the service.
North Dakota
Gift wrapping services are not taxable.
Ohio
Gift wrapping services are not taxable.
Oklahoma
Gift wrapping services are not taxable.
Pennsylvania
Gift wrapping services in Pennsylvania ARE taxable. From the Pennsylvania Department of Revenue website:
(c) Services. If a vendor makes a charge for wrapping property, whether the vendor has sold the property wrapped or not, the vendor shall be deemed to have made a sale of the wrapping services which the purchaser receives. The vendor shall collect tax upon the purchase price of the wrapping services without deduction for labor, service or handling charges. If a vendor is required to collect tax under this subsection on charges made for the service of wrapping property, the vendor is entitled to a resale exemption on the purchase of wrapping supplies.
Rhode Island
Gift wrapping services in Rhode Island ARE taxable. From the Division of Taxation website:
III. Gift Wrapping
Tax applies to the entire charge for “gift wrapping” (i.e., furnishing the materials and labor required to wrap an item for a customer so as to be suitable for use as a gift), whether or not the person who does the gift wrapping is the seller of the contents, and whether or not a separate charge is made for the gift wrapping. The person who does the gift wrapping may purchase the materials free of tax for resale.
South Carolina
Gift wrapping services are not taxable.
South Dakota
Gift wrapping services are not taxable.
Tennessee
Gift wrapping services ARE taxable.
Texas
Gifting wrapping services in Texas ARE taxable, provided the service is done by the same company selling the item. From the Texas Administrative Code:
(d) Gift wrapping supplies. Sales tax is due on the purchase price of gift wrapping supplies used by persons providing gift wrapping services.
(1) Tax must be paid on the purchase price of gift wrapping by the person who provides the service whether or not the item being gift wrapped was sold by the person providing the service.
(2) Tax must be collected on a charge for gift wrapping if the person who provides the gift wrapping service sold the item that is being wrapped and does not provide the service on a stand-alone basis.
Utah
Gift wrapping services are not taxable.
Vermont
Gift wrapping services are not taxable.
Virginia
Gift wrapping services in Virginia ARE taxable, unless they are performed by a non-profit. From the Virginia Policy Library:
Gift Wrapping Charges
Effective July 1, 1980, Virginia Code § 58-441.3(b) exempts from sales tax gift wrapping charges when such gift wrapping is performed by an organization conducted not for profit. (Senate Bill No. 73)
Washington
Gift wrapping services are not taxable.
Washington DC
Gift wrapping services are not taxable.
West Virginia
Gift wrapping services in West Virginia ARE taxable. From the West Virginia State Tax Department website:
All sales of tangible personal property or taxable services are presumed to be subject to tax.
Wisconsin
Gift wrapping services in Wisconsin ARE taxable. From the Wisconsin Administrative Code:
(7) GIFT WRAPPING. The amount charged for gift wrapping packages is taxable.
Wyoming
Gift wrapping services in Wyoming ARE taxable. From the Wyoming Streamlined Sales Tax Administrative Definitions:
Charges by the seller for any services necessary to complete the sale other than delivery and installation.
