Strange But True Tax Laws From All 50 States

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Uncommon Laws

The United States tax code is anything but simple. The instructions for the standard 1040 tax form alone are more than 100 pages long, and good luck getting through them in one sitting. Tax rules and regulations at the state level provide no relief, riddled as they are with strange fees and exemptions, some of them decades out of date. Every state has odd and sometimes unbelievable state tax laws — including a number of regulations that could save consumers money.

Related: Why Billionaires Pay Less Tax Than You

Taxing Illegal Drugs, AL

Alabama: Taxing Illegal Drugs

Alabama taxes the proceeds from the sale of illegal drugs by requiring sellers to have tax stamps. Anyone caught with large quantities of drugs and no stamps would face not only jail time but also prosecution for tax evasion unless they paid up. Though this brought in sizable revenue in the '90s, so little money comes in through the stamps now that the Revenue Department no longer includes it as a line item in the agency's books.

Related: Things to Know Before Buying Cannabis in States Where It's Legal 

Whaling-Related Expenses, AK
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Ice Blocks and Ice Cubes, AZ

Arizona: Ice Blocks and Ice Cubes

Several states, including Arizona, tax ice blocks and ice cubes differently. Since ice cubes are used in mixed drinks, and considered food, they aren't taxed by the state. Ice blocks, however, are subject to sales tax.

Related: What the Pandemic Means for Your Taxes

Dog Groomer
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Vending Machine

California: Vending Machine Fees

There is plenty of fresh fruit to be found in the Golden State and there's a 33% tax if it is bought from a vending machine. The tax applies to other food items, as well, including hot drinks, although there is an exception for vending machines operated by educational institutions when the items are sold to students.

Related: Bizarre Vending Machines Around the World

to go cups
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Colorado: The Cost of Safety

Consider this when taking a full cup to go and driving down a bumpy road in Colorado. Retailers in the Centennial State aren't taxed on the purchase of cups, but they are taxed when they buy lids and straws. Other items, such as toothpicks, portion dividers, cup sleeves, and bibs, are taxed as well.

Expired Car Seat

Connecticut: Exemptions for Safety Items

The Constitution State promotes public safety through its tax code by making numerous items tax exempt. Bicycle helmets, child car seats, firearm safety items like trigger locks and lock boxes all qualify as tax exempt.  

Related: Situations Where It's Probably a Bad Idea to Do Your Own Taxes

Presidents' Day (Feb. 18)

Delaware: Corporate Bargains

Delaware is one of five states with no sales tax. The state has a low 8.7% flat income tax on corporations, and if a business doesn't conduct its operations in Delaware, the corporate income tax might not even apply. Add to that the state's business-friendly laws and its non-jury chancery court known for impartial decisions, and incorporating in Delaware is a no-brainer. About half of all publicly traded companies in the country do just that.

The Farmer Exemption, FL
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Florida: The Farmer Exemption

Many states have tax exemptions for farmers and ranchers, but Florida's "greenbelt law" was vaguely worded and notoriously open to abuse — at least, until being strengthened over the past couple of legislative terms. Property developers had rented cows to avoid paying taxes while preparing their land for building. Even Disney World took advantage of the loophole.

Related: 50 Interesting and Fun Facts to Lighten Up Tax Time


Georgia: The Tax Cap

In 2014, Georgia became the first state to cap its income tax rate through a ballot measure. The tax rate cap of 6% is now part of the state's constitution. In 2017, a bill was introduced in the state legislature that could replace the state's six income tax rates with a flat 5.4% tax, but failed to pass. The current top rate in Georgia is 5.75%.

Saving a Tree, HI

Hawaii: Saving a Tree

Trees with historic or cultural value, and those that are otherwise deemed worthy of preservation due to their age, rarity, location, size, or aesthetic quality, come with a tax deduction of up to $3,000 a tree in Hawaii. The deduction can be used to cover the cost of maintaining the tree.

Related: The Best of Hawaii on a Budget


Idaho: Merrily Streaming

In 2014, Idaho changed its statute governing sales tax on cloud computing. The state no longer taxes purchases of cloud-based or downloaded computer software. Digital entertainment, such as ebooks and movies, is subject to sales tax if the purchase includes a permanent right to the work, meaning streaming or rental services may be exempt.

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Cake Treat, IN
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Indiana: Cake Treat

The Hoosier State has several oddball food taxes. For example, marshmallow creme is tax exempt, but marshmallows are not. Icing in tubes and containers of frosting are also exempt, but cake decorations are not.

woman with oxygen mask

Iowa: Use It or Lose It

A use tax is assessed for the use, storage, or consumption of something in a state, regardless where the purchase was made. If a computer is bought while visiting a state that doesn't charge sales tax, the buyer may still need to pay a use tax when returning home. Iowa has use-tax exemptions for prescription drugs and medical devices, including catheter trays, oxygen equipment, when they're sold to the user (rather than a business).

Related: What You'd Be Paying in Taxes in Other Countries

Balloon Payment, KS

Kansas: Balloon Payment

Want to ride in a hot air balloon in Kansas? If it is tethered to the ground, passengers are taxed for the entertainment. But if the rope is untied, it's treated as air transportation and the ride is tax-free. Wisconsin and Missouri have had similar laws on the books.

Breeding Contempt, KY

Kentucky: Breeding Contempt

Home to the world-famous Kentucky Derby, this state has a 6% sales tax on thoroughbred stud fees. The revenue has topped $15 million in some years, split among three horse breeder incentive funds.

Related: Best Dude Ranches for Escaping the Crowds This Summer

Hunters Day

Louisiana: Worth a Shot

Every September, Louisiana has a Second Amendment sales tax holiday. Hunting supplies, ammunition, and firearms are all exempt from state and local sales taxes, as well as use taxes. At one point it was accidentally repealed, but it was subsequently reinstated last year.

Blue Laws, ME
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Waste of Money, MD

Maryland: Waste of Money

Homeowners with septic systems in Maryland have had to pay $5 a month, or $60 a year, with the money going to upgrade wastewater treatment plants and failing septic systems and reduce pollution in the Chesapeake Bay.

Outside the Lines, MA
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Massachusetts: Outside the Lines

Massachusetts residents traveling for a holiday or celebration might run afoul of the law if they bring a bottle of liquor or wine. A special permit and fee are required to bring alcohol that wasn't purchased, and isn't intended for resale, in the state.

Buy: Snacks

Michigan: Be Prepared to Pay

Like many states, Michigan taxes prepared food but not unprepared food, and the law goes into detail about how to distinguish the two. Buying hot popcorn at a concession stand may be taxable, as that counts as prepared food, but a bag of chips isn't (unless it's heated or sold with an eating utensil).

A Fur Cry, MN
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Minnesota: A Fur Cry

Those trying to stay warm during the Minnesota winter used to think twice before buying a fur coat. While most clothing items are tax-exempt, real fur was subject to sales tax — 6.875% statewide plus local taxes. The tax applied to fur coats bought online, as well. The rule has since been revoked, likely because fur has become a less popular option.

Related: Where the Rich Hide Their Money From the IRS

Grows on Trees, MS

Mississippi: Grows on Trees

Individuals and groups of "private nonindustrial landowners" have been able to get a tax credit for up to 50% of the costs associated with hardwood and pine reforestation. The credit has a cap of $10,000 a year and a lifetime limit of $75,000.

The Legality of the Marriage Can Be Affected

Missouri: The Bachelor Tax

To encourage young men to marry, Missouri charged an annual tax of $1 to single men between the age of 21 and 50. The "bachelor tax" was passed in 1820, when $1 was equivalent to about $20 today, and it's no longer enforced.

Related: Ways a Relationship Can Hurt Your Mental Health

Pay Less for Prescription Drugs
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Montana: Prescription for Savings

In Montana, prescribed drugs and insulin count toward medical expenses for those who itemize deductions. Even with a valid medical marijuana card, though, the cost of buying or growing marijuana isn't deductible.

Related: Surprising Facts About the Marijuana Industry


Nebraska: Drug Tax Stamps

Like Alabama, Nebraska taxes the sale of illegal controlled substances. The state's law says drug dealers must buy drug tax stamps at a rate of $100 per ounce of marijuana, $150 per gram of controlled substances, or $500 per 50 dosage units of controlled substances that aren't generally sold by weight.

Body Building

Nevada: The Body Oil Deduction

Since 1999, the Mr. Olympia bodybuilding competition has been held in Las Vegas. Like everyone else, bodybuilders can deduct ordinary and necessary business expenses. But it's one of the few professions that can count body oil among those expenses.

Related: The Best Workouts for Staying in Shape After 50

Home in suburban Maryland
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New Hampshire: Improperty

New Hampshire has neither a sales tax nor an income tax (with the exception of a 5% tax on interest and dividends above $2,400, or $4,800 for joint filers). Instead, many local governments rely on property taxes, which are among the highest in the nation.

The Pumpkin Rule, NJ
100 birthday cake

New Mexico: Happy Birthday

The year-round warmth of New Mexico draws many retirees, and the state tax rules have an interesting twist for the elderly: Those who are over 100 years old and not claimed as a dependent don't have to pay income tax.

Any Way You Slice It, NY

New York: Any Way You Slice It

Looking forward to a delicious New York City bagel? Those who want it prepared — toasted, sliced, covered with cream cheese, or altered in any way — have to pay the 8.875% tax that applies to processed foods. An unsliced bagel to go, however, isn't taxed.

Related: Best Bagel Shops Across the Country

I Don’t Do Drugs

North Carolina: Taxing High Crimes, Too

The Tar Heel State also has a tax on illicit substances ranging from moonshine to marijuana. As the state department of revenue website points out, paying for the state tax stamp doesn't mean the drugs are legal, it just means the tax has been paid. Somewhat ironically for those possessing the illegal drugs, the bulk of the revenue from the stamps goes to law enforcement.

Have It For A Song, ND
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North Dakota: Have It for a Song

A musical composition performing tax levies 5% on the sale and licensing of performing rights for music and dramatico-musical compositions. The tax is based on gross receipts from the previous year.

Related: Gift Ideas for Music Lovers

Going Organic, OH

Ohio: Going Organic

Ohio doesn't tax human organs, bones, blood, or other parts for transfusing or transplanting. But sales tax applies to human hair and animal parts for transplantation and implantation.

Sell Furniture and Decor Online
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Oklahoma: Taxing the Tangible

Most states have property taxes, but several counties in Oklahoma stand out because they tax personal possessions that aren't used to generate income. Even basic household items, such as furniture, could be subject to the "tangible personal property" tax.

Related: DIY Furniture Makeovers for a Weekend Project While Stuck at Home

The Industry Faces Advertising Restrictions
Take-Home Booze

Pennsylvania: After the Flood

The Keystone State has an 18% sales tax on liquor. While taxing booze isn't odd, the tax, initially 10%, was created specifically to pay for the repair of the city of Johnstown after a flood in 1936. Those repairs were completed in 1942, but the tax remains. So while death and taxes may be inevitable, taxes can take on a life of their own and live on indefinitely.

Emoticon Tax Form, RI
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Rhode Island: Emoticon Tax Form

The Rhode Island individual income tax return form (RI-1040) features emoticons. A smiley face appears on the "Amount Overpaid" (refund) line, while a frowny face is shown on the "Total Amount Due" line.

The Carcass Credit, SC

South Carolina: The Carcass Credit

Hunters who also have a license or permit to operate as a meat packer, butcher, or processing plant could get a $75 tax credit per carcass they donate to charity. The deer has to be prepared for consumption and the taxpayer must have a contract with a nonprofit to qualify for the credit.

Related: Surprising Things Your State Taxes

Income Untaxed, SD

South Dakota: Income Untaxed

The bad news: South Dakota doesn't give tax breaks for contributions to in-state 529 college savings plans. The good news: It's because the state doesn't have an income tax. 

Prepare Yourself, TN
Christmas tree at home
Tom Merton/istockphoto

Texas: Holiday Spirit

Holiday greenery, such as wreaths, mistletoe, and Christmas trees, are all subject to sales tax in Texas — but not when bought from a charitable organization. Another way to lessen holiday taxes is to hire a decorating service and provide the decorations. If the company supplies them, both materials and labor are taxable.

Pole Tax, UT

Utah: Pole Tax

Although the rule was appealed all the way to the Utah Supreme Court, there is a 10% tax on fees charged by businesses such as strip clubs that have nude or partially nude workers. The tax also applies to food and drink sold by the establishment.

Street Scammers

Vermont: No Curb Appeal

Street performers, keep your wallets handy. In Burlington, Vermont's largest city, the City Council may tax "the exhibition of common showmen, circuses, menageries, carnivals, and shows of every kind, and all plays, athletic contests, exhibitions, or entertainments for money."

Waist Training

Virginia: Back-to-School Corsets

Like many states, Virginia has an annual back-to-school tax holiday weekend. But Virginia's list of tax-free goods has been known to include an odd array of items: fur coats, lingerie, garters and garter belts, wedding apparel, aprons, and corsets, to name a few, eligible with sale prices of $100 or less.

Income Tax Washington

Washington: Yes Then No Income Tax

Residents of Washington were once hugely in favor of an income tax law, with 70% voting not once but twice in favor of it, during the Great Depression. How popular was the income tax? Only 62% of voters wanted to repeal Prohibition, which was on the same ballot. But when the law was challenged by well-off business owners and got held up in the state supreme court, everyone had time to read the new income tax forms and suddenly the law that many thought would be easily approved was deemed unconstitutional — and Washingtonians voted against an income tax ever since.

Fireworks Fee, WV
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Internet Tax, WI
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Wisconsin: Internet Tax

As of last year, Wisconsin was one of just a few states that taxed internet access. That's illegal according to federal law, but Wisconsin secured a grandfather exemption and could continue the tax through June 30, 2020. The amount varied depending on the type of service (dial-up, DSL, cable, etc.) After last year's deadline, it was no longer taxable.

Mars Candy

Wyoming: Sweet Deal

Wyoming considers candy (including mints and gum) food and exempts it from sales tax. Gift sets and holiday baskets are also exempt if more than 50% of the product's value comes from exempt foods.

Related: Candy Stores That Will Make You Feel Like a Kid Again

Gym Membership
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Washington, D.C.: Mixed Message

The nation's capital apparently has mixed feelings when it comes to healthy habits. Both gyms and sugary drinks draw a tax of around 5.75% and 8% respectively, though there have been efforts to lift the "yoga tax."