What: Selecting the perfect Valentine’s Day gift is always difficult, and taxes are unlikely to be the primary motivation behind the gift selected. Still, different states can treat the taxes on the same type of gift very differently.
Why: States do not impose sales taxes on all goods and services in a uniform manner or at a uniform rate. Five states do not impose a sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Some states do not impose a sales or use tax on services, and in other states, services are generally exempt from sales and use tax unless specifically identified as taxable. Many states have an exemption for taxes on food, but they often define what is included in the exemption very differently, especially with respect to candy. Here is a look at some popular Valentine’s Day gifts and some of those differences in the sales tax treatment.
- Candy, and in particular chocolate, remains a popular Valentine’s Day gift choice. Some states have adopted a uniform definition of candy, but many use their own unique definition. A few states separately address chocolate
- Candy is subject to sales tax in 29 states and exempt from sales tax in 16 states and the District of Columbia
- Many states do not specifically address jewelry, making it subject to the general sales tax rate. In those states that do mention jewelry, it is taxable or even subject to a higher tax rate
- Flowers are generally taxable; however, a couple of states have limited exemptions for flowers from certain sources. A few states have a sales tax exemption for food-producing plants
- Dining out, or “prepared food” in sales tax speak, is pretty uniformly taxable even if there is otherwise an exemption for other food, but again definitions vary
- A day at a spa is a service, and many states do not tax services. In the half-dozen states that specifically mention spas, some tax them and some do not
- And, if a pet is the object of your Valentine’s Day attention, the gift is likely to be taxable
This 2022 Valentine’s Day graphic from Wolters Kluwer Tax & Accounting also provides some fast facts and additional information.
Who: Carol Kokinis-Graves, JD, is an attorney and senior tax analyst for Wolters Kluwer Tax & Accounting, specializing in tracking, analyzing and reporting issues regarding state and local sales and use taxes. She is also an expert in e-commerce transactions involving state taxes.
PLEASE NOTE: These materials are designed to provide accurate and authoritative information in regard to the subject matter covered. The information is provided with the understanding that Wolters Kluwer Tax & Accounting is not engaged in rendering tax advice or accounting, legal, tax or other professional service.
Contact: To arrange interviews with Carol Kokinis-Graves or other tax experts from Wolters Kluwer Tax & Accounting on this or any other tax-related topics, please contact Bart Lipinski.
