Trick or treat, is your candy Taxable?

October 25, 2017

As you are passing out candy during this Halloween season, trick or treating, or simply buying candy at the store, there is something you should know: most candy has a state sales tax.

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. Also, items that are not bars, drops, or pieces also are 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. While some items commonly considered candies are not taxable, many candy items are taxable.

Be sure to pay attention to the candy items which may or may not be taxable when buying Halloween candy this season!

For more information about sales tax on food in Indiana, please refer to Information Bulletin #29.