The Weird Illinois Tax That Makes Some Candy Types Cheaper Than Others

When is a piece of candy not a piece of candy? When it has flour in it — at least according to the state of Illinois, which imposed a sales tax on candy and soft drinks in 2009. The policy, however, contained a curious provision. While defining "candy" in a generally recognizable way — "a preparation of sugar, honey, or other natural or artificial sweeteners," possibly containing chocolate, nuts, or fruits and sold in "bars, drops, or pieces" (via Illinois.gov) — it left one substantial loophole: Nothing that contains flour can be considered candy.

That means that treats like Twix and Kit Kat bars aren't taxed as candy, but Skittles and Starburst are. So is the popular but controversial Halloween favorite, candy corn. This loophole also means that the line between candy and not-candy is occasionally drawn straight through a single brand: Regular Milky Way bars (which contain a kind of flour) can be classified as candy, but dark-chocolate Milky Way Midnight bars (which don't contain any flour) can't.

This difference isn't just linguistic. In Illinois, non-candy packaged foods are considered groceries and are thus subject to a 1% sales tax — so, if that Milky Way costs $2, you can expect to pay $0.02 in tax on it. Since 2009, though, candy in Illinois has been taxed at the general sales tax rate of 6.25% instead of the lower grocery rate. That means that if you'd rather have a $2 Milky Way Midnight bar, you're look at a tax burden of 12.5 cents.

When Illinois introduced its candy tax, it had a couple of goals. One, because this was 2009, was to raise revenues following the Great Recession. But, along with other states, Illinois also introduced its tax on candy and sugary beverages to combat childhood obesity. (Similar "snack taxes" have been proposed elsewhere, including England.) Recent studies focusing only on soda taxes suggest they can effectively dissuade shoppers from purchasing these products: In five cities where such taxes went into effect between 2017 and 2018, sales of the taxed products declined by 33% over a two-year period (via Berkeley Public Health).

Still, that can create a patchwork of state laws. Among the 10 most populous states in the U.S., Illinois is already a bit of an outlier by taxing groceries in the first place; in other large states, groceries are exempt from sales tax. Across the border in Indiana, groceries are generally exempt, even though candy and soda are taxed at the full rate; Indiana is one of nearly 20 states where, for taxation purposes, candy isn't considered food. (You might be wondering, is chocolate candy? Not if it's baking chocolate, which isn't subject to Indiana's candy tax.) Shoppers in D.C., meanwhile, don't pay a sales tax on store-bought candy, but they do pay a tax of 5.75% on candy sold in vending machines. With so many intricate ins and outs, buying candy feels like a passage that Shakespeare never got around to writing: Would a sugary treat, by any other tax designation, taste as sweet?