Trick-or-treating time is right around the corner, and if you live in an area where children will be out and about, ringing doorbells and looking for treats, chances are good that you may be handing out Halloween candy. Depending on where you live, though, did you know you might pay more tax on certain kinds of candies?
My sister got a surprise when she bought Halloween candy. She bought bags of Twix bars and Snickers bars at the same store. She paid 10 cents in tax on the Twix, but she paid 49 cents in tax on the Snickers. The same manufacturer makes both candies, and both were on sale for the same price. Why?
The answer can be found in the way our state taxes candy. We live in Illinois, and Illinois is one of a group of states that taxes candy at a higher rate based on its ingredients. As crazy as this may seem, the presence of flour as an ingredient in candy determines whether or not a candy is truly a “candy” for tax purposes.
Our tax code states, “Products whose ingredient list contain the word ‘flour,’ regardless of the type of flour (e.g., wheat, rice) are not candy.”
When I look around a store’s candy aisle, I see many products I’d consider to be “candy” – but our state doesn’t see it the same way. Snickers and 3 Musketeers are candy. Twix, Kit Kats and even Twizzlers licorice are not candy because each of these products contains flour.
Is this crazy? Our state is not alone. A quick web search notes that Colorado, Iowa, Kentucky, Minnesota, New Jersey, North Carolina, Rhode Island, Tennessee, Washington and Wisconsin have similar tax laws regarding the presence of flour in candy – if it contains flour, a candy product is legally “not candy” and is taxed at the food rate.
So what exactly makes something candy? The law in Illinois defines candy this way:
“‘Candy’ means a preparation 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’ does not include any preparation that contains flour or requires refrigeration.”
As wild as it seems, a fruit bar with chocolate in it, but no flour, would be considered candy. Chocolate covered cherries and raisins also are candy. Chocolate-covered pretzels? Not candy.
If you live in a state that defines candy by its flour content, you may wish to keep potential tax differences in mind when purchasing Halloween candy – especially for candy you’re giving away to trick-or-treaters. There are plenty of coupons out right now, too, for many brands of fun-sized Halloween candies, and my sister thought she was getting the best deal possible on the candy she bought – until she saw the sales tax eat up nearly all her coupon savings on one bag.
Of course, the real Halloween candy deals are right around the corner – after Halloween! While that doesn’t help any of us who are buying ahead of the holiday to share treats with children who ring our doorbells, post-Halloween clearance sales shouldn’t be ignored if you want to buy candy for your own use.
I’ll admit that I’m a licorice lover, and I love getting deals on it after Halloween ends. Our school often asks for bags of candy to be donated for various fun fairs or student events too, and the candy’s expiration dates tend to run many months past Halloween.
While we’re on the topic of post-Halloween savings, here’s another tip that our family takes advantage of year after year. Once the Halloween clearances come around, we take our children to the store when the costumes hit the deeply discounted point – usually 75 to 90 percent off.
They decide what they want to be for the following year’s Halloween, and we usually pay $5 or $6 per costume for our kids. We buy them a size larger than what they currently wear, and then hang them in the closet until next year.