Tax & Accounting Blog

Make No Bones About It, Halloween Candy Taxable in Tennessee

Indirect Tax October 26, 2017

Halloween is just around the corner and Tennessee has recently issued an administrative Important Notice No. 17-22 (10/01/2017) to clear up the confusing taxability of candy and food products in the state. Candy is defined by Tennessee law as a preparation of sugar, honey or other natural or artificial sweetener combined with chocolate, fruits, nuts, or other ingredients and formed into a bar, drop, or piece. TN Code Ann. 67-6-102(9). These pieces of candy are taxed at the full 7% state rate (plus applicable local taxes).

“Candy” does not include any products that include flour as a listed ingredient. Id. These glutinous goodies get a benefit of a reduced 4% state rate. TN Code Ann. 67-6-228(a). Likewise if a product must be refrigerated it is not candy under Tennessee law. Even those pieces of candy with cookie in them can be subject to the full 7% rate if bundled up with flour-free delectables as a bundled sale taxable at the general rate. Important Notice No. 17-22 (10/01/2017). Therefore smart shoppers in Tennessee (and other states that impose similar flour based exemptions) can pinch a couple of pennies on their tricks or treats.