Which state has the most wacky tax laws?

Your Guide to State, Local, Federal, Estate + International Taxation

The federal tax code sure is convoluted, with millions of words and tens of thousands of pages and regulations to parse through. And while you may not agree with all (or any) of the code sections, do any of them stand out as being just plain weird? Well, there sure are a fair share of state laws that will make you do a double-take. Below are just a few examples of states’ wacky tax laws.

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-Alabama: Residents are required to pay a Confederate veterans tax, despite all Civil War veterans being long dead.
– Alaska: One of two states that does not have state sales or income taxes, but local jurisdictions are allowed to collect their own sales taxes.
– Arizona: Ice cubes are exempt from sales tax but blocks of ice are taxable.
– Arkansas: There is a tax on body piercings and tattoos.
– California: Fresh fruit and fruit salads from vending machines are taxable at 33%.
– Colorado: Coffee cup lids – but not the coffee cups – are taxable.
– Connecticut: Diapers are considered clothing and thus taxed.
– Delaware: Has a low, flat tax on corporations, and is therefore home to approximately half of the country’s publicly traded companies.
– Florida: If there is cattle on your land lease, you may use the state’s agricultural use tax break as a tax strategy.
– Georgia: Places a large 23% tax on cigars.
– Hawaii: Residents get an income tax deduction for expenses related to maintaining “exceptional” trees on private property.
– Idaho: If you make $2,500 while in Idaho, you’re required to file a tax return
– Illinois: Candy made without flour is not taxed, while candy made with flour is.
– Indiana: Marshmallow crème is not taxed, but marshmallows are taxed.
– Iowa: Taxes pumpkins to be displayed but exempts pumpkins to be eaten.
– Kansas: Untethered hot air balloon rides are exempt from taxes, but tethered balloons are taxable
– Kentucky: Sales tax is required on thoroughbred stud fees.
– Louisiana: Every September, hunting supplies, ammunition and firearms are exempt from sales tax.
– Maine: There is an additional tax on blueberries.
– Maryland: Homeowners who use a septic system pay an extra fee each year.
– Massachusetts: The city of Boston requires an extra tax on tickets for sightseeing touring venue.
– Michigan: Clothing over $175 is taxable while clothing under this price is exempt.
– Minnesota: Sports clothing is taxable, but not karate uniforms or bowling shirts and shoes.
– Mississippi: Livestock sales are exempt from tax.
– Missouri: Single men between the ages of 21 and 50 must pay a $1 annual tax.
– Montana: Prescribed drugs are considered medical expenses, allowable for itemized deductions, while prescribed marijuana is not.
– Nebraska: Drug dealers are required to pay $100 per ounce of marijuana or other controlled substance.
– Nevada: The state gives out a deck of cards for free to anyone who files a tax return.
– New Hampshire: The second state that has neither sales or income taxes, it relies on high property taxes.
– New Jersey: Like Iowa, pumpkins sold as decorations are taxable but those for consumption are exempt.
– New Mexico: Persons aged 100 or older are exempt from income tax.
– New York: Whole bagels are exempt from sales tax, but if it is sliced, it is taxable.
– North Carolina: Tax is collected on the disposal of appliances.
– North Dakota: Tax is imposed on the sale and licensing of performing rights of music.
– Ohio: No tax on human organs, bones or blood, but tax applies to human hair or animal parts.
– Oklahoma: Grocery purchases are taxed at the full state sales tax rate.
– Oregon: A 25% sales tax is applied to the purchase of recreational marijuana.
– Pennsylvania: An 18% sales tax is applied for every bottle of alcohol sold.
– Rhode Island: Emojis are included on the state’s personal income tax form.
– South Carolina: You can get a $50 rebate by donating a deer carcass to charity.
– South Dakota: All sales to firefighters and EMT personnel are exempt from sales tax.
– Tennessee: Baby food, dips and spreads are subject to a 7% state sales tax.
– Texas: Belts are tax exempt, but belt buckles are not.
– Utah: Escort services and strip clubs pay a 10% tax.
– Vermont: The state’s largest city, Burlington, taxes street performers.
– Virginia: During the state’s tax free back-to-school week, fur coats and corsets are among the wacky items that are also exempt.
– Washington: A state with no income tax, residents not once but twice voted in favor of it.
– West Virginia: An additional 12% tax applies to fireworks.
– Wisconsin: Tax was placed on internet access bills, even though it was illegal according to federal law. The state was grandfathered in, but that exemption lapsed in 2020.
– Wyoming: Candy, mints, gum and holiday baskets are all exempt from sales tax.

Considerations

As you can see, no state or industry is immune from wacky tax laws. With all the complications that can come from these miles of red tape, it is important to not get tripped up. Consult with a tax advisor that has experience handling state and local tax matters to make sure you and your business stays compliant.

For any questions or concerns or more wacky tax laws, please contact Brian Ess, J.D.; BrianE@hhcpa.com; (480) 483-1170.