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Texas: No Sales Tax on Certain "Healthy" Snacks

  • Jul 22, 2013 | Gail Cole

Texas has a new law on the books intended to simplify the taxation of certain "snack items" by exempting them from sales tax. It takes effect September 1, 2013.

SB 1151, as signed into law, exempts the following snack items from Texas sales tax:

  • "Breakfast bars, granola bars, nutrition bars, sports bars, or yogurt bars, unless labeled and marketed as candy;
  • Snack mix or trail mix;
  • Nuts, unless candy-coated;
  • Popcorn; and
  • Chips, crackers, or hard pretzels."

However, if those items are sold "through a vending machine or …sold in individual-sized portions," they are not exempt from sales tax.

Prior to the enactment of SB 1151, "single-serving goods sold in convenience stores with eating areas were subject to a sales tax." This is because food that is sold for immediate consumption, as in a restaurant, is taxable. The new law is intended to simplify sales tax collection for businesses, particularly convenience stores. It holds that individually wrapped snack foods are taxable no matter where they're sold. (CSPnet.com).

According to Susan Traylor Bittick, principal at a global tax services firm, that's a good thing. She told The Cypress Creek Mirror that "Senate Bill 1151 … 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. Generally speaking, Texas exempts 'food products' but it taxes food that is sold in restaurants."

The new legislation exempts the food listed above because of the "type of the snack and the size of the package…." Where it is sold is not relevant.

Keeping track of the ever-changing state and local sales tax exemptions is hard. Automated sales tax software makes it simple.

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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.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.