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Sales Tax Secrets: Tea Party

  • Sep 19, 2013 | Christina Lengyel


Taxing tea is significantly less controversial than it once was, but that doesn’t mean there aren’t complexities to it. As any good Brit will tell you, there are endless ways to take your tea, which means there are at least a few different ways to tax it.  We’ll take a look at three of them and hope that helps you sort out at least the majority of your herbal inventory.

 Concentrated Tea

Concentrated tea comes in powders and liquids, sweetened and unsweetened. In certain states, all of these factors come into play. For example, in Colorado, powdered tea is not taxed as it is considered a food, whereas the liquid concentrate is taxed as a soft drink. Knowing the form and additional ingredients in a concentrate is also essential.

Tea in a Bag

Remain calm, the wide variety of tea bags does not mean you need to separate Earl Grey and Oolong when going through your products. It just means you have to separate supplements from regular teas, since many states tax the two categories differently. Even a simple green tea may have a supplement label if marketed by a health company, in which case it’s taxed in most states. It’s helpful to know your brands. For example, a classic Bigelow tea will usually come with Nutrition Facts while almost any Yogi tea comes with Supplement Facts. Pennsylvania is one state that specifically exempts tea and taxes supplements. The only way to know is to check.

Tea in a Bottle

Sweetened or unsweetened isn’t just a question that will totally alter your tea drinking experience. It could be one that changes taxability. In some states, like Ohio, sweetened tea calls for a tax while unsweetened does not. What’s inside the bottle has a pretty big bearing on the matter. For example, in the case of tea and many other food items, fruit juice is considered a sweetener.

Hopefully these tax tips will save you a little time, long enough to relax with a cup of your favorite tea.

photo credit: Giuseppe Bognanni via photopin cc

photo credit: rosmary via photopin cc

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
Christina Lengyel
Avalara Author Christina Lengyel
Christina Lengyel is a writer by trade and has found herself in taxes by way of research. As an analyst, she has tracked down thousands of products by UPC in order to determine when and where they are taxed.