Texas Changes Snack Taxes

Simplifies single-sized package rules for convenience stores

Published in CSP Daily News

DALLAS -- Starting Sept. 1, consumers in Texas will being paying sales tax on all single serving goods. State Senate Bill 1151 will simplify sales tax collection for convenience stores and other businesses that sell snacks in individual-sized servings in Texas, said

On Sept. 1, sales tax will be due on all sales of single-sized servings of chips; nuts; crackers; breakfast, granola, yogurt, and protein bars; and other snacks. Single-sized servings are packages labeled as one serving or packages that contain less than 2.5 ounces (if the package does not state servings).

For sales tax purposes, taxable "snacks" are:

  • Breakfast bars, granola bars, nutrition bars, sports bars, protein bars, or yogurt bars (not labeled and marketed as candy).
  • Snack mix or trail mix.
  • Nuts (candy-coated nuts are taxable, regardless of size, unless purchased with food stamps).
  • Popped popcorn.
  • Chips, crackers or hard pretzels.

No tax is due on cartons or bags containing several single-sized servings of snacks. In addition, single-sized servings of other groceries are not taxable unless sold by a restaurant or business that provides tables and chairs.

Previously, only single-serving goods sold in convenience stores with eating areas were subject to a sales tax, reported The Cypress Creek Mirror.

"Senate Bill 1151, which was sponsored by Senator Juan Hinojosa and Rep. Dwayne Bohac, is a very good bill because it 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," Susan Traylor Bittick, principal at global tax services firm Ryan, told the newspaper. "Generally speaking, Texas exempts 'food products,' but it taxes food that is sold in a restaurant," said Bittick.

Before the law passed, single-serving items capable of being consumed on the premises of the retail establishment were taxed.

"SB 1151 changes that by making it clear that these items are exempt based on the type of the snack and the size of the package, not whether they are sold at a store that has eating facilities," she said. "That is easier for the customer to understand, and it creates greater consistency with regard to the tax treatment of these items."