51 Little-Known Tax Deductions
In This Article
Do you ever wonder why the total on your receipt from the grocery store doesn’t exactly add up to the sticker price of the items in your shopping cart? Or been blindsided when the price of a snack doubles or triples based on where you buy it?
The culprit behind these conundrums could be some bizarre taxes.
The United States tax code is one thing, but every state has its own tax rules as well. And many are stuffed with absurd taxes.
If you want to be wealthy someday, learning how to minimize your taxes is a crucial step.
Some strange taxes exist because they were put into practice a century or two ago, and no lawmaker has yet taken the initiative to repeal them. Others are more recent, likewise brought into being due to people’s preferences and changing social mores.
From playing cards to local delicacies, here are some of the most ridiculous taxes across the fifty United States.
Foolish Food Taxes
1)Marshmallows
Indiana’s got it out for your s’mores and hot cocoa. This state levies a “candy tax” on marshmallows. Marshmallow cream, however, is tax-free. You can rest easy knowing your fluffernutters are safe.
2) Blueberries
Thinking you’ll opt for natural sugar and shave off your tax bill? As the country’s main distributor of blueberries, Maine takes a cut from anyone who grows, purchases, sells, or handles blueberries within the state — to the tune of an extra 1.5 cents per pound.
3) Clams
The list in Maine just keeps on growing. The oddly specific “mahogany quahog (clam) tax” means seafood lovers pay an extra $1.20 per bushel of clams. If you’re ever out in Maine, opt for the lobster; due to ridiculous taxes, it could be cheaper than the clams.
4) Candy
Choose your sweets wisely in Illinois, which takes it to the next level. The state’s 6.25% “candy tax” only applies to confectionary treats made without flour. Sorry, Skittles. We’re opting for Twix in Illinois.
5) Sliced Bagels
You’ve heard of BYOB, but what about BYOBC? Bring your own bagel cutter. New Yorkers are subject to the “bagel cutting tax” — an extra 8 cents for a pre-sliced or ready-to-eat bagel. Sliced bagels are taxed as a prepared “restaurant food.”
Hold the cream cheese and lox!
6) Vending Machine Fruit
The only thing more absurd than buying a banana from a vending machine is paying taxes on a banana from a vending machine — which is exactly what you’ll do in California. The golden state has a 33% tax on vending machine items, including apples and fruit cups. Stick to grocery stores instead, where the fruit is not subject to these weird taxes.
7) Coffee Lids
If you’re hiking in Colorado, bring an extra thermos to fill up with coffee. Colorado taxes charge all “nonessential packaging” an extra 2.9%. This means straws, stir sticks, cup sleeves, and lids will cost a little bit more. Save the environment (and your money) and avoid ridiculous taxes by bringing a reusable mug, or just make your own at home.
8) Fountain Soda
In Chicago, it’s better to drink your soda from a can than order one at the fountain, even if a fountain soda in a glass tastes better and gets rid of the need for a disposable container. That’s because soda cans carry a 3% tax, but the syrup used to make fountain soda rings up at 9%, triple the tax rate.
9) Salt
Want something salty to go with that sweet soda? In Mississippi, there’s a 3% tax on all salt made from land or water in the state.
Effed-Up Entertainment Taxes
8) Cards
Alabama is the only state that previously levied a tax on playing cards. The “card tax” meant that whenever you wanted to play a game of Crazy Eights with friends, you’d have to pay a crazy 10 cents to buy a deck of cards. Luckily, this ridiculous tax was suspended in 2015.
11) Hotels/Motels
Looking for your next getaway? You might want to cross Georgia off the list. The state charges a $5-per-night fee for hotel rooms. The only way around this tax is time. If you stay longer than 31 days, you’re in the clear. The hotel is then classified as an “extended stay rental” and therefore does not incur tax.
12) Car Tires
Taking a road trip? Try not to get a flat tire in Ohio. You’ll pay the price of replacing each tire, plus an extra $1 in tax.
13) Live Entertainment
You wouldn’t dream of heading to Vegas and leaving without catching a show, but it’ll cost you. Almost all forms of live entertainment are taxed at 9% in the state of Nevada, with extremely specific exceptions (go-go dancing, anyone?)
14) Music Licensing
If you were thinking about heading to North Dakota to see a musical and save on the ticket prices, think again. The state levies a tax on all sales and licensing of musical compositions.
15) Special Activities Tax
North Dakota isn’t about to reap all the revenue from recreation. Their southern neighbor levies a “special tax” on numerous items including alcohol, cigarettes, gaming, precious gems, and amusement devices.
Oh, and let’s not forget — coin-operated laundry machines. The first two are typical of most states, but South Dakota really knocks it out of the park with the additional absurd taxes.
If you consider a glass of Chardonnay while watching Netflix and waiting at the Laundromat to be a fun evening, head elsewhere.
16) Bingo
As we just discovered, states love their “sin taxes.”
In New Mexico, that 0.5% tax extends to any game that relies on chance rather than skill—including bingo and raffles.
17) Dance Tax
If you were going to skip Vegas and the Dakotas, you might pass Washington State on by as well. Their dance tax is imposed on any venue where you might have the opportunity to boogie down.
While it was repealed in 2013 after protesters salsa danced and waltzed for legislators, the repeal expired in 2017.
18) Decorative Pumpkins
New Jersey just can’t seem to get into the Halloween spirit. When used as food, pumpkins are tax-exempt. However, if a pumpkin is “painted, varnished or cut and sold as decorations,” it incurs sales tax.
Loony Lifestyle Taxes
19) Prepaid Cell Phones
In Louisiana, sellers of prepaid cell phones or phone cards must collect a 2% service fee (in other words, a tax) on all retail sales.
This kind of tax is particularly tough on parents buying limited service for young kids, and families who can’t afford a monthly plan.
20) Diapers
Connecticut used to classify disposable baby diapers as “clothing” and they were taxed at the clothing sales tax rate.
Adult diapers, however, were exempt. This tax law was reversed in 2018.
21) Flushing The Toilet
Even going to the bathroom isn’t safe from absurd taxes. Maryland’s “toilet flush tax,” known as the “Chesapeake Bay Restoration Fee,” costs state residents roughly $60 per year.
22) Being Single
Getting married has its tax perks—joint filing, for example. But Missouri takes it one step further with this state tax. In 1821, the state imposed a “bachelor tax” on single men aged 21 to 50. The price of freedom is a dollar every year. The law is still technically on the books even if it is rarely enforced.
23) Getting a Tattoo
You might want to think twice before getting inked—at least in Arkansas. This state charges a 6% sales tax on tattoos, body piercings, and electrolysis.
Taxes with a Side of Self-Incrimination
24) Illegal Drugs
Illegal drug taxes exist in multiple states. In Nebraska, the burden lies on the drug dealers, who must buy a tax stamp for their contraband. Tennessee spreads the burden by requiring anyone in possession of illegal drugs to buy a drug stamp as part of the Unauthorized Substances Tax (also known as the “crack tax”).
The same applies in Alabama, but with higher stakes: those caught with illegal drugs but no record of buying the tax stamps could be charged with tax evasion (in addition to possession).
25) ANY Illegal Activity
Continuing the trend of ridiculous taxes cashing in on illegal activity, the IRS requires that taxpayers declare any ill-begotten income, too. Per Publication 17 instructions for preparing your tax return, “Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.”
Of course, if you went through all the trouble of dealing drugs, stealing property, or embezzling funds, it’s unlikely you’ rat yourself out to the government anyway.
Most Ridiculous Taxes
The above list is by no means exhaustive. There are multitudes of crazy taxes hiding in plain sight, in tax codes all over the world (because who reads the tax code before traveling?)
To avoid paying absurd taxes, pay close attention to unusual taxes and fees on common activities.
Then, modify your choices to exclude taxable items.
For example, if you live in New York, buy your bagels in a sack of a dozen and a container of cream cheese instead of hitting the cart before you head to the office. Or if you’re in Maine, choose the scallops and not the quahogs.
But being careful about your consumption is just one way to avoid ridiculous taxes. If you make sure to educate yourself on ways to lower your taxable income, your tax bill will shrink.
And remember, for each ridiculous tax on this list, there’s an equally ridiculous tax break out there. You never know if you might qualify for one, so be on the lookout.
