Avalara > Blog > Sales Tax > Celebrate the 4th of July with a Sales Tax on Fireworks

Celebrate the 4th of July with a Sales Tax on Fireworks

  • Jul 4, 2016 | Laura McCamy

The 4th of July is a day to wave the red, white, and blue, grill up your favorite thing to put inside a bun, and basically celebrate what makes us Americans. And what makes us more American than sales taxes? A sales tax on fireworks, of course.

Patriotism! Fireworks! Sales Tax?

The 4th is a sparkling holiday, quite literally for the many thousands of people who bring home sparklers, firecrackers, roman candles, M-80s, and other fireworks to enjoy in their backyards after the barbecue fire dies down to embers. Gunpowder, explosions, and bright flashes of light are inextricably tied to this holiday.

Some states ban or heavily restrict the sale of fireworks to private citizens, due to concerns about fire and public safety. The states that do allow fireworks sales to consumers often add an additional fireworks tax on top of the regular state sales tax. The money from these special taxes often goes to fund fire departments.

Indiana calls its fireworks tax a Fireworks Public Safety Fee. The tax is an extra 5 percent added to the regular sales tax rate.

Georgia calls its tax a Fireworks Excise Tax. Just to be clear: This is not a sales tax -- it’s a tax on the seller. Fireworks vendors can pass the excise tax on to consumers, as long as they state it separately on the invoice. If the customer pays, the seller has to charge sales tax on the amount of the excise tax. It’s like a double-layered tax parfait.

Michigan In; Texas Out

For years Michigan didn’t allow the sale of the kind of small-scale fireworks people like to set off in their yards. Michigan residents simply drove to a neighboring state, bought fireworks, and brought them back. In 2011, the state finally got tired of losing sales taxes on fireworks to Indiana and enacted the Michigan Fireworks Safety Act. You can guess what that is. A sales tax on fireworks, of course. The state adds 6 percent on top of the 6 percent state sales tax. Why should Michigan miss out?

Texas is the odd state out. It had enacted a special 2 percent sales tax on fireworks in 2000, with funds allocated to rural fire departments. In September 2015, however, Texas ended the special tax. You still have to pay TX sales tax, but you can now buy Lone Star sparklers without the added fireworks tax.

State Sales Tax on Fireworks

States that sell fireworks generally charge sales tax on these incendiary purchases, even when they don’t add a special sales tax on fireworks. South Dakota is so proud of the revenue it collects from sales tax on fireworks that it published a special report. Iowa also issued a report to calculate whether tax revenue from fireworks sales would offset Fire Marshal costs to administer licenses to sell fireworks.

If you’re feeling especially patriotic this 4th of July, you might find yourself in the nation’s capital. For fireworks, your best bet is to head down to the Mall for a lovely public fireworks display. Washington, DC, prohibits the sale of all fireworks except small sparklers. Happy Independence Day!

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
Laura McCamy
Avalara Author Laura McCamy