Texas Simplifies Sales Tax on Single-Sized Snacks

chipsTexas residents will soon start paying sales tax on all single serving goods after a new law was passed out of the state legislature.

Starting Sept. 1, sales tax will be due on all sales of single-sized servings including chips:

* Breakfast bars, granola bars, nutrition bars, sports bars, protein bars, or yogurt bars (not labeled and marketed as candy);
* Snack mix or trail mix;
* Nuts (candy-coated nuts are taxable, regardless of size, unless purchased with food stamps);
* Popped popcorn; and
* Chips, crackers, or hard pretzels.

In addition, single-sized servings of other groceries are not taxable unless sold by a restaurant or business that provides tables and chairs.

The change comes after the state legislature passed Senate Bill 1151 to simplify sales tax collection for convenience stores and other businesses that sell snacks in individual-sized servings.

Susan Traylor Bittick, principal at Ryan, an award-winning global tax services firm, explained how the new law will effect local businesses.

“Senate Bill 1151, which was sponsored by Senator Juan Hinojosa and Rep. Dwayne Bohac, is a very good bill because it clears up confusion that currently exists among many convenience store operators and their customers as a result of the way the sales tax is applied in Texas to food items,” said Bittick.

“Generally speaking, Texas exempts ‘food products’ but it taxes food that is sold in a restaurant,” said Bittick.

Before the law passed, single-serving items capable of being consumed on the premises of the retail establishment were taxed.

“SB 1151 changes that by making it clear that these items are exempt based on the type of the snack and the size of the package, not whether they are sold at a store that has eating facilities,” she said. “That is easier for the customer to understand, and it creates greater consistency with regard to the tax treatment of these items.”

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