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Wisconsin Gift Basket Taxability


Many gift baskets contain both taxable and non-taxable items. Wisconsin state has tried to make it easier for businesses to determine taxability of a gift basket and its contents. In their recently updated guidance, the state of Wisconsin clarified that taxability of gift baskets falls into two categories:

  • Gift Basket – More Than 50% of Items in Basket Are Taxable Products; and
  • Gift Basket – 50% or Less of Items in Basket are Taxable Products

According to the guidance, if the “…retailer’s purchase price and sales price of the taxable products in the gift basket are more than 50% of the retailer’s purchase price and sales price, respectively, of all the products included in the gift basket,” and the products were “…packaged together by the retailer and sold for one non-itemized price,” then the gift basket is taxable.

If the amount (in dollars) of the non-taxable food items is greater than 50% of the total price, then the gift basket is not subject to tax.

Example 1:

  • Basket – Cost - $1.00 / Selling Price - $3.00 (Taxable item)
  • Oranges – Cost - $3.00 / Selling Price - $4.00 (Food item – non-taxable)
  • Apples – Cost - $2.00 / Selling Price - $4.00 (Food item – non-taxable)
  • Candy – Cost - $12.00 / Selling Price - $19.00 (Taxable item)

TOTAL COST: $18.00 (Taxable items total $13.00 / Non-taxable, food items total $5.00)

TOTAL SELLING PRICE: $30.00 (Taxable items total $22.00 / Non-taxable, food items total $8.00)

Example 2:

  • Basket – Cost - $1.00 / Selling Price - $3.00 (Taxable item)
  • Fresh Fruit – Cost - $6.00 / Selling Price - $15.00 (Food item – non-taxable)
  • Cocoa Mix – Cost - $3.00 / Selling Price - $7.00 (Food item – non-taxable)
  • Candy – Cost - $2.00 / Selling Price - $5.00 (Taxable item)

TOTAL COST: $12.00 (Taxable items total $3.00 / Non-taxable, food items total $9.00)

TOTAL SELLING PRICE: $30.00 (Taxable items total $8.00 / Non-taxable, food items total $22.00)

EXAMPLE 1 is Taxable. EXAMPLE 2 is Non-Taxable.

To read all the details, and learn a bit about taxability of the raw products put into each gift basket, visit the Wisconsin Department of Revenue website here….http://www.revenue.wi.gov/taxpro/news/120507c.html.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Susan McLain
Avalara Author Susan McLain
Susan McLain began her career as a technical writer in technology industries such as satellite networking and medical devices. Her skills encompass technical and marketing writing, usability engineering, verification and validation testing and protocol writing, requirements development, business analysis, technical illustration/graphic design and marketing. She has owned her own business providing service to small to medium sized business and in other positions, she has been in project management, documentation and marketing. She is currently the content specialist for Avalara helping to “make sales tax less taxing.”