If You Get It Sliced, the State Gets a Cut: Exposing the ‘Bagel Tax’

Posted On Mon, April 18, 2016 By

Posted On Mon, April 18, 2016 By In City Living, Policy

Image: Jazz Guy via flickr

Though it’s not too hard to understand the logic behind a mansion tax, a bagel tax…oy vey! Next time you hit your local bagel shop, know that if you get your breakfast sliced–or heaven forbid, with schmear–you’ll get smacked with an 8.875 percent sales tax. If you eat it in the store, (even if it’s still whole), boom, more tax.

The folks at Turbotax explain that, “the state adds an eight-cent tax to any altered bagels,” which includes, “bagel sandwiches (served buttered or with spreads, or otherwise as a sandwich)” or even just sliced for you. According to the New York state Department of Taxation and Finance, “Generally, food and food products sold by food stores are exempt from sales tax.” That bagel loses its exemption when it is “sold heated; it is sold for consumption on the premises; or it has been prepared by the seller and is ready to be eaten, whether for on premises or off premises consumption.”

bagel display 2

The state began enforcing this little-known legal distinction around 2010 to pump much-needed dough into its coffers. Customers were generally under the impression that getting bagels sliced was just another option, not one that came with a price hike. Bagel store owners were the first ones surprised in some cases, when they got audited and informed they’d need to start charging the tax.

The “bagel tax,” of course, has given New Yorkers yet another thing to complain about. Bagel shops reported that the roughly-eight-cent price hike resulted in a number of irate customers. Some say the law isn’t clear enough on the details–for example, while sliced bagels are taxed, a pre-sliced bakery loaf isn’t. If the thought of yet another tax gets a rise out of you, dodge the bagel tax by leaving them uncut. And if you really want to keep your bagels safe, put lox on them (We’ll be here all week).

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  • my eyes are hungry

    But when the deli guy is the one who cuts and toasts it and then hands it off to the register staff, they don’t know if it’s been cut or not. So are you saying they automatically assume every bagel has been altered at the point of purchase?

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