Don't Mess With Taxes

Photo by Kay Bell

Do you have your candy for Halloween's trick-or-treaters? Or are you going to have to make another grocery store run to replace the sweets that someone somehow munched early?

No judging here. Been there, done that. This week. 😊 And we surreptitious candy snatchers are not alone.

Halloween and all its accoutrements, edible and otherwise, is incredibly popular in the United States. This year is expected to be record-setting.

Spooky expenses: Total spending for Halloween 2023 is expected to reach a record $12.2 billion, exceeding last year's record of $10.6 billion, according to the National Retail Federation's (NRF) annual survey conducted by Prosper Insights & Analytics. That breaks down to $108.24 per person.

As in prior years, handing out candy tops the list of how people plan to celebrate, with 68 percent say they will greet young (and young-at-heart) ghouls who knock on their doors with sweet treats.

The NRF survey says candy spending is expected to reach $3.6 billion, up from $3.1 billion last year. As noted, some of that sweet spending is due to replenishing original stashes.

But it's not just the kiddos with candy collection containers who are happy we are spending so much on treats. Some state treasuries are, too, since they collect sales tax on packaged confections.

State sales taxes on food: Forty-five U.S. states impose a sales tax of some sort.

Of those 45, 13 have a grocery tax: Alabama, Arkansas, Hawaii, Idaho, Illinois, Kansas, Mississippi, Missouri, Oklahoma, South Dakota, Tennessee, Utah, and Virginia.

Of the 13 grocery-taxing states, six — Arkansas, Illinois, Missouri, Tennessee, Utah, and Virginia — tax foodstuffs at a lower rate than typical sales tax.

Hawai'i and Idaho offer a grocery tax credit that helps offset taxes paid throughout the year.

And this year, Tennessee grocery shoppers got 3-month sales tax holiday.

But for this weekend's By the Numbers consideration, the count of 13 states that tax groceries is the officially recognized figure.

Defining and taxing food: Of course, since taxes are part of the process, things can get stickier than that chocolate bar left in a hot car. Not all food products are taxed the same. 

"For retailers to determine the sales tax you will pay on your favorite Halloween candies will largely depend on whether candy is considered a grocery/food item in that state and if it is, whether candy will be taxed the same way as groceries," notes the Sales Tax Institute.

And some states and the District of Columbia exclude candy from the grocery sales tax exemption or reduced rate.

That's a lot of tax transactions to track.

Most of us consumers, however, will just drop the goodies in our carts this Halloween (and in December, when candy canes and peppermint bark show up on store shelves), and pay what the checker says is due, tax or no tax.

After all, aren't we and our youngsters worth a few added taxes?

Happy Halloween!

You also might find these items of interest:

• Sales tax jurisdictions across the United States
• Marshmallow seller doesn't owe s'more (or any) VAT to HMRC
• Unpaid taxes apparently lead to closure of chocolate-themed Denver restaurant

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