Tax & Accounting Blog

Saving on Taxes: How to Cheat America Out of a Birthday Present this Fourth of July

Indirect Tax, ONESOURCE June 29, 2016

For our fellow Texans, this will be the first 4th of July where fireworks can be purchased at a lesser cost due to the repeal of the 2% Fireworks Tax on September 1, 2015. Fireworks sellers must still collect and remit the regular sales and use taxes. In Texas, fireworks can only be sold to the general public during 3 periods, from May 1 through May 5 for Cinco de Mayo (only at locations not more than 100 miles from Texas-Mexico border), from June 24 to July 4 for Independence Day, and December 20 through January 1 for New Year’s Eve. Previously, the Fireworks Tax was applied to small fireworks such as firecrackers, rockets, roman candles, and fountains classified as Division 1.4G explosives by the U.S. Department of Transportation.

Credit: Royal icing firework and star cookies made by TuUyen Decker, Manager in Carrollton, TX

Credit: Royal icing firework and star cookies made by TuUyen Decker, Manager in Carrollton, TX

 

As you start compiling your 4th of July holiday celebration decorations, you may be able to save additional tax dollars on purchases of the U.S. flag. It may be surprising news to you that not all states exempt the U.S. flag. Out of the states with a sales/use tax, only 14 states have this exemption and it must be an official United States flag for the exemption to apply. Decorative banners or representations of the U.S. flag, such as magnets, stickers, and label pins, are not eligible for exemption. If you’re in one of the five states without a sales/use tax or one of the 14 states below, get your U.S. flag tax-free this 4th of July!

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Interesting fact: Once a flag has served its useful purpose, the proper and preferred method of disposal is by burning it. Until 1969, the burning of the U.S. flag was illegal.

If you are in Texas, we hope you take advantage of the tax savings on fireworks this year. Otherwise, we hope your 4th of July is filled with tasty treats and good times with family and friends as you celebrate our Nation’s independence with a boom!

Credit: U.S. flag cake pops made by Ankita Bajaj, Legal Analyst in Carrollton, TX

Credit: U.S. flag cake pops made by Ankita Bajaj, Legal Analyst in Carrollton, TX

 

Additional contributions to this blog made by Marianne Chionglo and Ankita Bajaj