Happy National Hot Chocolate Day!

Did you know whether your hot chocolate is taxable? It depends on how it’s sold. 

*Grocery Store? Most states exempt it as a grocery item.

*Café To-Go? Likely taxable as a prepared beverage.

*Powder Mix vs. Ready-to-Drink?  The rules differ—some states tax ready-to-drink but exempt dry mixes.

 Sales tax laws vary widely by state and even by locality. Some states exempt groceries from sales tax but apply it to prepared beverages. Buying hot chocolate mix from a grocery store might be tax-free, but purchasing a freshly made cup from a café or restaurant could result in an added tax. Recent tax law updates may also affect how certain beverages, including hot chocolate, are categorized for taxation.

Sales tax affects more than just major retail purchases, even impacts something as simple as a cup of hot chocolate! This National Hot Chocolate Day, enjoy your warm beverage and stay informed about how sales tax plays a role in everyday transactions. If you have questions about sales tax on food and drinks, consult one of our sales tax experts.

About Davis Davis & Harmon LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis Davis & Harmon LLC – Sales Tax Experts specializes in sales/use tax refund recovery and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis Davis & Harmon, LLC, we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.