Avoid These 5 Weird Sales Taxes

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NEW YORK (MainStreet) — The average state can make a lot of hay via the sales tax, and it's the one type of tax consumers really can control.

Of course, how much you pay in state sales tax really depends on where you live. California, Indiana, New Jersey, Mississippi and Tennessee are at the head of the class when it comes to hammering citizens with high sales taxes according to the Sales Tax Clearinghouse. On the other side of the spectrum, if you live in Alaska, Montana or New Hampshire, you may not be able to golf year-round, but you can get a huge break on sales taxes.

In California, the combined state and county sales tax pushed the overall sales tax rate to approximately 9%. So if you buy a $1,000 sofa in the wrong county, the retailer will add another $90 or so on your total bill. If you are buying new furniture for your whole house, then we’re talking some real money.

Depending on where you live, you may not have to pay taxes on certain items (prescription drugs are usually untaxed in most states, for example). Some states may also exempt food and clothing, and possibly non-prescription drugs.

By and large, sales taxes come in two distinct categories:

Vendor taxes. States impose vendor taxes on retailers doing business in the state. In most cases, retailers absorb the tax, but pass along the costs to customers in the form of higher prices.

Consumer excise taxes. This isn’t exactly a shocker to most consumers, who pay taxes on a wide list of goods and services they purchase. Retailers and other sales agents collect the tax from customers, then pass it along to the state.

The onus is on you, the consumer, to try and avoid sales taxes, which means avoiding “unique” sales taxes you may not even know about. Here’s a list of some “under the radar” state sales taxes that you’ll have to pay if you purchase the following items or services:

  • New York: In 2010, New York City cracked down on a local institution – the bagel eater. If you buy a bagel and take it home, no tax for you. But if you buy a bagel at a restaurant or deli, and eat it there, the city smears you with a sales tax of about 10 cents per bagel.
  • Texas: Buckle up, partner: Texas allows sales tax holidays, particularly at “back to school” time, when moms are dressing their kids up for school. But there are some weird exceptions – while belts are exempt from state taxes, belt buckles aren’t. Also, cowboy boots are tax-exempt, but not climbing boots.
  • Wisconsin: In 2009, the Cheese State enacted a new law declaring that marshmallows are taxable unless they include flour in their ingredients. Also, the new law states that while yogurt and raisins are tax-exempt, raisin-flavored yogurt is not.
  • Missouri: The “Show Me” State has a law that stresses the calmest among us – yoga enthusiasts. The state slaps a 4% tax on the practice of yoga.
  • Washington: Under HB 2075, the state of Washington now taxes the streaming of digital movies and music. It’s the first state in the country to do so.

Here’s a tip for the budget-savvy consumers: Many states, like Massachusetts, South Carolina, And Mississippi, have “sales tax holidays” – usually weekends where the state charges no sales tax on goods and services purchased.

Check your state’s consumer affairs office for more information.

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