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Last Updated: 7/14/2016

Sales

Generally, sales of alcoholic beverages are taxable. Alcoholic beverages contain 0.5 percent or more alcohol by volume.

Beer, wine, and liquor sold by a business with an intoxicating liquor license are subject to the following taxes:

  • 6.875 percent state general rate sales tax
  • 2.5 percent liquor gross receipts tax
  • any applicable local taxes

Liquor store sales

Liquor stores are not allowed to sell alcohol for resale by another business. Also, nonprofit organizations are not allowed to purchase liquor exempt from tax from a liquor store.

Some liquor stores also sell other taxable and nontaxable products. While liquor tax does not apply to these products, they may be subject to sales and use tax or other taxes. See the chart below for examples. 

Taxable (State and Local Sales Taxes Apply)

Nontaxable (No Taxes Apply at Retail Sale)

Accessories (bottle openers, glasses, lighters)

Bottled water

Alcohol-free wine

Cigarettes (sales/cigarette taxes paid at distributor level)

Candy

Event admission (wine, beer, or liquor tasting)

Chewing tobacco or snuff (tobacco products tax applies)

Food and food ingredients (jarred cherries, olives, etc.)

Cigars (tobacco products tax applies)

Ice

Drink mixes (less than 50% juice by volume)

Juice (contains 50 percent or more juice by volume)

E-cigarettes (tobacco products tax applies)

Returnable deposit

Juice (less than 50% juice by volume)

Sacramental wine for religious ceremonies

Keg pumps or coolers (sale, lease, or rental)

Nonalcoholic beers

Soda pop and sweetened water (soft drinks)

For more information about soft drinks, candy, food and food ingredients, see the following fact sheets:

Liquor distributor sales

Liquor sales to a business that provides a completed Form ST3, Certificate of Exemption, are not taxable.

Liquor distributors cannot sell liquor to a business listed on the Posting of Tax Delinquencies Liquor, Wine and Beer Sales.

Employee sales

Sales of liquor and other taxable items to employees are taxable. Charge tax on the price the employee pays. If you give taxable items to an employee, you owe use tax on your cost for that item. For more information, see the Use Tax section in this guide.

Delivery charges

If a seller charges to deliver a taxable item to a customer, the delivery charges are also taxable, even if separately stated on the receipt. If you deliver a taxable liquor product, the 2.5 percent Liquor Gross Receipts tax also applies to the delivery charge.

For more information, see Fact Sheet 155, Delivery Charges.

Discounts and rebates

Quantity discounts

If you offer a discount to a customer who buys a large quantity, charge tax on the discounted price.

Rebates

A rebate either reduces the purchase price or is sent to a customer as cash or credit after the sale.

If a rebate voucher is issued to use on a future purchase with the same retailer or store who provided the rebate, it reduces the sales price. Do not treat the rebate like cash.

If a rebate check is issued, it is treated like cash.

For more information, see Fact Sheet 167, Coupons, Discounts, Rewards, Rebates, and Other Forms of Payment. 

Gift certificates and gift cards

Gift certificates and gift cards are not taxable when sold. When a gift certificate or gift card is redeemed, charge sales tax on any taxable portion of the purchase. The gift certificate or gift card is processed as a cash payment.

Local sales tax

Some cities and counties have local sales and use taxes. You must charge any local sales taxes that apply if your business is located in, or delivers to, an area that has them.

To determine the sales tax rate, use the location where the product is received by the customer, typically your business or a delivery address. You can use the Sales Tax Rate Calculator to help you determine the sales tax rate.

Note: The rate calculator does not include special local taxes.  

For more information, see:

Note: The rate calculator does not include the 2.5 percent Liquor Gross Receipt tax.

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