Trick or Treat, Sales Tax, and Candy
October 26, 2016
During the Halloween season as you are passing out candy, trick or treating, or simply buying candy at the store, there is something you should know! Many items commonly considered candy, including some candy bars, are not classified as “candy” for sales tax purposes.
Generally, the sale of food and food ingredients for human consumption is exempt from Indiana sales tax. Food is defined as substances sold for ingestion or chewing by humans that are consumed for their taste or nutritional value. The term does not include tobacco, alcoholic beverages, candy, dietary supplements, or soft drinks.
Candy is defined as preparations of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. Candy is subject to Indiana sales tax.
However, an item containing flour is not considered candy and is exempt from Indiana sales tax.
Many items commonly considered candy contain flour and are not subject to Indiana sales tax. These items include:
- Kit-Kat Bars
- Nestle Crunch Bars
- Twix Bars
Gluten-free candy is taxable if it does not contain flour.
Also, items that are not bars, drops, or pieces also are exempt from Indiana sales tax. For example, Pixie Stix are not considered candy for sales tax purposes.
While some items commonly considered candies are not taxable, many candy items are taxable. Chewing gum is a taxable item because it is a preparation of sweetener and flavorings in a bar or piece form.
As you are buying candy this year, pay attention to the items which may or may not be taxable! For more information about sales tax on food in Indiana, please refer to Information Bulletin #29.
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