- Some of the craziest taxes levied on the state level are used to leverage local industries and influence residents’ behaviors
- Unique tax breaks and laws have promoted unconventional tax avoidance schemes in some states
Taxes are a necessary evil, and apparently, they’re also a strange one. Tax liabilities on both the state and federal levels are purposed primarily to generate government revenue. But in the case of some unique state tax codes, they work to influence behavior or take advantage of lucrative local industries as well.
1. New York: Bagel Tax
New Yorkers aren’t shy when it comes to bragging about our bagels (they are the best, after all!). The state’s government isn’t shy either when it comes to levying a tax on this leading industry. NYS applies an $0.08 sales tax on any “altered” bagels (meaning any bagel purchased with a coffee, spread with cream cheese, sliced, or toasted, etc.). The theory is to tax food that is sold for on-premise consumption, but the actual specifics of the tax are pretty jumbled. Long story short—if you don’t like plain bagels, you’re not going to like this sales tax!
2. Maine: Blueberry Tax
Blueberries might not be the biggest fruit, but the state of Maine, which is the nation’s leading blueberry producer, taxes them in a big way! The state takes advantage of its blueberry monopoly when collecting dues from its residents: Maine taxes the prized fruit at $0.015 per pound and uses the generated revenue for the promotion and research of wild blueberries.
3. Arkansas: Body Alteration Tax
In 2005, Arkansas introduced a 6% sales tax that applies to body alterations including piercings, tattoos, and even body hair removal. Whereas most states leave body alterations as tax-exempt, Arkansans reportedly travel to their neighboring states when getting tatted or pierced to avoid their home state’s hefty sales tax.
4. South Carolina: Newlywed Tax Credit
South Carolina offers a $50 non-refundable state income tax credit for couples who complete premarital counseling. The course needs to be completed within 12 months of getting a marriage license, and the credit will be reduced to $25 if only one member of the married couple completes the course.
5. Montana: No Sales Tax & No Vehicle Inspection
When purchasing a car in New York, you could be liable for tax rates as high as 8.88%; depending on the price of the vehicle, you could be looking at a significant sales tax. In Montana, where there’s no sales tax and no required vehicle inspection, making vehicle purchases cheap and tax-free. These benefits have given rise to a new industry; there are companies that will help you create an LLC based in Montana with which to purchase, register, and legally own your vehicle, thus avoiding your home state’s potential sales tax and required inspections.
Don’t let crazy tax codes get in the way of an easy return filing process—talk to an expert! Give us a call at 516-541-6549 and visit our website for more news updates.