Quick Tax Quiz: When Is a Candy Bar Not a Candy Bar?

May 15, 2012

The answer is E:

Exempt from tax: Kit Kat; Twizzlers Strawberry Twist; Milky Way Bar; Hershey Powdered Cocoa for Baking
Taxed: Brach’s Milk Chocolate Covered Raisins: Brach’s Chocolate Covered Blue Diamond Almonds: 3 Musketeers Bar: Milky Way Midnight Bar: Sugar Free Pop Rocks, Strawberry: Kraft Bakers Chocolate, Unsweetened

If you found this confusing, imagine how hard it will be for small retailers to keep track of which of the 3,500+ items they need to tax, or for a consumers basing a purchase on the price including tax.

The Washington Department of Revenue defines candy and candy-like items this way (see section 901 of this Senate bill):

Candy is a preparation of sugar, honey, or other natural or artificial sweeteners combined with chocolate, fruits, nuts, or other ingredients or flavorings and formed into bars, drops or pieces. Candy does not include any preparation containing flour and does not require refrigeration.

This means a candy bar containing flour (a Milky Way Bar or Kit Kat) is not taxed, while one without flour (a Milky Way Midnight Bar or 3 Musketeers) is. Licorice is also except due to the flour content. The only way for a consumer to know what’s taxed before heading to the checkout counter is to read the ingredient label and remember the state’s definition of “candy or candy-like products.”

Sales tax exemptions like those for groceries—and exemptions to the exemptions, such as candy-like-but-not-technically-candy products—create unnecessary complexity in the tax code, confusion for taxpayers and retailers, and a higher rate for all taxed items.

View the list of taxed and non-taxed candy (Excel file).

Blog posts on this topic:

Is Twix Candy?

How Much Sales Tax Does the Easter Bunny Pay?

I’ll Have Some Margarita Mix To Drink and a Packet of Lemonade Mix For Dessert

Taxes on Chocolate: Not So Sweet

Let Them Eat Rice Crispy Treats!


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