Fa La La: The Taxation of Christmas in Texas
- Dec 23, 2013 | Gail Cole
The Christmas season comes with Christmas trees and mistletoe, wreaths and lights, parties and gifts. And as the Texas Window on State Government reminds, many holiday items and activities are subject to sales tax.
To learn which aspects of the holidays are subject to sales tax in Texas, and which are exempt, read on.
Christmas trees, wreaths, decorative holly, mistletoe, poinsettias, and just about any other decorative green purchased in Texas are subject to sales tax unless they are sold by a tax-exempt organization during a tax-free sale.
Tree and home decorating services
Lots of people decorate their own trees and homes, but some prefer to have a service do it for them. In Texas, if you provide your own decorations but hire a decorating service to artfully arrange them on your tree and in and around your home, the decorating services are not taxable.
However, if the decorating service provides both the decorations and the decorating services, “the total charge for the materials and labor is taxable.”
Decorating nonresidential property
Many businesses hire decorators to install holiday decorations such as lights, decorated trees, and so forth. If the business provides all decorations and the decorator does not install a permanent fixture (such as a hanger in a ceiling) to place the decorations, the service is exempt from sales tax.
However, if the decorator does install a permanent fixture (like a ceiling hanger) along with the decorations, the charge is taxable.
In addition, if the decorator supplies both the decorations and the decorating services, the service is subject to sales tax.
Food-laden tables are part of most holiday celebrations, and the taxation of food can be tricky in Texas:
- Bakery products are not subject to sales tax “unless they are sold with plates or eating utensils.” So go ahead, buy lots of buns, cookies and cakes.
- Prepared meats, (think turkeys and hams) that are “kept hot and ready to eat” are subject to sales tax. However, smoked turkey and ham that is purchased cold is exempt, unless it is sold with eating utensils, when it is subject to sales tax.
- If you pay a service to smoke meat that you provide, the charge is exempt from sales tax.
- Prepared holiday meals sold hot and ready to eat are subject to sales tax. However, if holiday trimmings are sold cold and must be heated prior to being consumed, the food is exempt from sales tax.
- When a store offers gift wrapping services for items purchased in that store, the gift wrapping services are taxable “as the sale of a service in conjunction with the sale of a taxable item.”
- However, an item is purchased at one store and taken to another store or a gift wrapping service, the gift wrapping charges are exempt from sales tax.
Whether or not customers pay sales tax on gift wrapping services, sellers must pay sales tax on purchases of packaging and wrapping supplies.
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Sales tax applies to many different situations. For example, if your holiday celebrations include renting a facility for a party, banquet, or similar event, the rental charges are exempt from sales tax provided that:
- “The facility is not located in a building with sleeping accommodations;
- The rental is not connected to the sale of a taxable items such as prepared food; or
- The rental does not include or constitute access to an amusement service.”
Learn more about sales tax and facility rentals, cleaning charges, set-up fees, and just about anything else connected with the holidays in Texas at ‘Tis the Seasion—Holiday Goods and Services.
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