Retailers and e-tailers thank you for your holiday spending spirit. So does your state's treasury.
Many seasonal items are taxable, as you probably noticed as you were picking up gifts, making holiday party arrangements and buying your tree.
Here in Texas, the Comptroller of Public Accounts has a special Web page with details about holidays and how seasonal purchases contribute to the state's coffer
"Christmas trees, seasonal plants, holiday decorations, tempting foods and lovely wrapped gifts add beauty and tradition to a holiday," says Texas Comptroller Glenn Hegar. "So when does a customer pay sales tax on holiday items and services?"
The short answer is in just about every instance. Remember, we don't have an income tax here in Texas.
I suspect, however, that most states, with or without income tax, that collect sales taxes tend to rake in plenty this month, too, on the seasonal sales. California does. Its State Board of Equalization also has published a fact sheet on the taxability of holiday times in the Golden State.
Since I'm in Texas, here are some highlights from the Lone Star State's official holiday tax page.
Trees and other decorations: Most sales of Christmas trees are subject to state and local sales tax, unless the tree is sold by an organization that has received a letter from the Comptroller granting the organization a sales tax exemption.
Charges to decorate a tree are not taxable when the customer provides the decorations. But when a decorator both sells the decorations and decorates the tree, the total charge is taxable.
And sales of holiday flora — poinsettias, mistletoe, holly, lilies and the like — are taxable, unless, as with trees, sold by a tax-exempt group.
It's a similar situation when it comes to decorating your house. Charges to decorate are not taxable when the customer provides the materials, but when a decorator sells the materials then puts them up, the total charge for the materials and labor is taxable.
If you think you can avoid the tax by simply having a holiday message painted on a window, think again. Charges to paint holiday pictures and messages on windows are taxable.
Holiday specific items, services: Special holiday situations also tend to be taxable. The Texas Comptroller specifically notes the following are taxable:
- The sale of a letter from Santa Claus,
- A recorded holiday message from Santa if you prefer audio,
- Tickets to see holiday characters perform, and
- Rental or sales fees for holiday costumes.
If, however, you decide to hire an actor to play Santa or some other holiday character, there's no tax on that charge.
Buying gift cards as stocking stuffers? Lucky you. There's no sales tax on gift cards, gift certificates or prepaid debit cards.
Finally, if you just don't have time to wrap presents, choose wisely on how to get that task done. It could make a tax difference.
Charges for gift wrapping are taxable if the store that sold the item also wraps the item. But gift wrapping is not taxable when an item is purchased at one store and taken to another store to be gift wrapped.
Many edible items taxed, too: And what about the food? I hope you have an appetite for even more splitting of holiday tax hairs.
The Comptroller says that:
Turkeys or hams kept hot (ready to eat) are taxable whether whole or cut in pieces. A smoked turkey or ham that is not kept hot is taxable only if sold with eating utensils. A charge to a customer to smoke a turkey or ham owned by the customer is not subject to tax.
Bakery products are not taxable unless sold with plates or eating utensils.
A complete holiday meal, such a turkey with all of the trimmings, is taxable if the meal is sold hot and ready to eat. If the meal needs further preparation or heating, it is not taxable.
So if I ask the take-out place to leave my Christmas meal on the counter so it can reach room temperature, can I avoid the tax? Maybe. But in this case, I might end up spending my tax savings on a trip to the emergency room to treat the effects of improperly stored food.
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