Strange But Real 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at the state level provide no relief, riddled as they are with strange fees and exemptions, some of them decades out of date.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: 11 Cheap or Free Ways to File Your Taxes

Related: 50 Weird Laws From Around the World

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ALABAMA

Alabama taxes the proceeds from the sale of illegal drugs by requiring sellers to have tax stamps -- similar to the excise tax imposed on cigarettes. 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.
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ALASKA

Whaling captains recognized by the Alaska Eskimo Whaling Commission can deduct up to $10,000 for whaling-related expenses. The deduction is considered a charitable contribution, even if the money isn't paid to a charitable organization.
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ARIZONA

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.
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ARKANSAS

What do pet grooming, gutter cleaning, and body piercing have in common? In Arkansas, each of these services is subject to a 6 percent gross receipts sales tax -- a tax to the business providing the service.
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CALIFORNIA

There is plenty of fresh fruit to be found in the Golden State and a 33 percent 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.
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COLORADO

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.
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CONNECTICUT

Connecticut taxes children's disposable and reusable diapers, as they are considered clothing. However, come July 1, 2018, diapers and feminine hygiene products will be exempt. Adult diapers already are exempt.
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DELAWARE

Delaware is one of five states with no sales tax. The state also has a low 8.7 percent flat income tax on corporations, which is probably why more than half of the country's publicly traded companies call the First State home.

Related: Too Busy to File a Tax Return? 11 Tips for Procrastinators

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FLORIDA

Many states have tax exemptions for farmers and ranchers, but Florida's "greenbelt law" is vaguely worded and notoriously open to abuse. Property developers rent cows to avoid paying taxes while preparing their land for building. Even Disney World has taken advantage of this loophole.
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GEORGIA

In 2014, Georgia became the first state to cap its income tax rate through a ballot measure. The tax rate cap of 6 percent is now part of the state's constitution. This year, a bill was introduced in the state legislature that could replace the state's six income tax rates with a flat 5.4 percent tax.
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HAWAII

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: 11 Things to Do Now to Lower Next Year's Tax Bill

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IDAHO

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 e-books 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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ILLINOIS

Pity the poor candy-store owner. In Illinois, Twix bars aren't taxed because they are made with flour, so they don't meet the state's definition of candy. Other Mars candy bars such as Snickers, though, are taxed, because they contain no flour. Similar laws are on the books in Washington, Colorado, and Connecticut.
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INDIANA

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.
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IOWA

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).
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KANSAS

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 similar laws.
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KENTUCKY

Home to the world-famous Kentucky Derby, this state has a 6 percent sales tax on thoroughbred stud fees. The revenue, which tops $15 million in some years, is split among three horse breeders incentive funds.
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LOUISIANA

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.
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MAINE

Officially called the Maine Wild Blueberry Tax, this charge amounts to 1.5 cents per pound of wild blueberries sold. Businesses generally pass the tax on to consumers.
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MARYLAND

Homeowners who are connected to a septic system in Maryland pay a fee of $5 a month, or $60 a year. The money is used to upgrade wastewater treatment plants and failing septic systems, and reduce pollution in the Chesapeake Bay.
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MASSACHUSETTS

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 any alcohol that wasn't purchased, and isn't intended for resale, in the state.
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MICHIGAN

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).
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MINNESOTA

Those trying to stay warm during the Minnesota winter should think twice before buying a fur coat. Real fur is subject to sales tax -- 6.875 percent statewide plus local taxes. The tax applies to fur coats bought online, as well. Fake fur, however, isn't taxed.
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MISSISSIPPI

Individuals and groups of "private nonindustrial landowners" can get a tax credit for up to 50 percent 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.
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MISSOURI

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.
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MONTANA

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

Like Alabama, Nebraska taxes the sale of illegal controlled substances. The state's law says drug dealers must purchase 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.
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NEVADA

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: 30 Essential Tax Tips for Small-Business Owners

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NEW HAMPSHIRE

New Hampshire has neither a sales tax nor an income tax (with the exception of a 5 percent 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.
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NEW JERSEY

Several states, New Jersey included, make a distinction between pumpkins used for food and pumpkins used for decoration. If they are painted, cut, or sold as decorations, the pumpkins are taxable.
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NEW MEXICO

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.
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NEW YORK

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 percent tax that applies to processed foods. An unsliced bagel to go, however, isn't taxed.
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NORTH CAROLINA

Those flying into the Raleigh-Durham area and renting a vehicle might want to take a cab to a rental agency away from the airport. Durham County charges a car rental tax of 25.61 percent at Raleigh-Durham International Airport and 16 percent in the rest of the county.
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NORTH DAKOTA

A musical composition performing tax levies 5 percent on the sale and licensing of performing rights for music and dramatico-musical compositions. The tax, based on gross receipts from the previous year, is due on March 15.
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OHIO

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.
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OKLAHOMA

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.
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OREGON

Oregon started issuing marijuana licenses to retailers and lowered the state sales tax for recreational marijuana to 17 percent from 25 percent in October 2016. Municipalities can add up to 3 percent local sales tax on recreational marijuana, but medical marijuana is exempt from local and state sales tax.
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PENNSYLVANIA

In the city of Johnstown, there is an 18 percent sales tax on alcohol. Taxing alcohol isn't odd, but the tax was created specifically to fund the repair of the city after a flood in 1936. Those repairs were completed in 1942, but the tax remains.
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RHODE ISLAND

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.
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SOUTH CAROLINA

Hunters who also have a license or permit to operate as a meat packer, butcher, or processing plant could receive 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.
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SOUTH DAKOTA

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.
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TENNESSEE

Foods that aren't prepared by the seller come with a 5 percent state sales tax. This includes baby food, dips, and some spreads. However, livestock feed is exempt from sales and use taxes.
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TEXAS

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

Although the rule was appealed all the way to the Utah Supreme Court, there is a 10 percent 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.
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VERMONT

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."
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VIRGINIA

Like many states, Virginia has an annual back-to-school tax holiday weekend. But Virginia includes an odd array of items on its list of tax-free goods: fur coats, lingerie, garters and garter belts, wedding apparel, aprons, and corsets, to name a few. To be eligible, the items must have a sale price of $100 or less.
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WASHINGTON

Trying to help the environment and save money by driving an electric car? In Washington state it will cost you. Electric-car owners there pay a $150 annual fee. The money is used to help improve highways and roads, an expense usually covered by revenue from the tax on gasoline.
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WEST VIRGINIA

West Virginia legalized additional types of fireworks, such as roman candles and bottle rockets, in 2016. A new 12 percent "safety fee" (in addition to sales tax) came along with the legalization. The money raised from the fee helps support veterans and volunteer fire departments.
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WISCONSIN

Wisconsin is one of just a few states that tax internet access. That's illegal according to federal law, but Wisconsin secured a grandfather exemption and can continue the tax through 2020. The amount varies depending on the type of service (dial-up, DSL, cable, etc.).
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WYOMING

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 percent of the product's value comes from exempt foods.
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WASHINGTON, D.C

The nation's capital apparently has mixed feelings when it comes to healthy habits. Both gyms and sugary drinks draw a 5.75 percent tax