As a way to pay for putting out the inevitable Fourth of July fires, Texas has created a special tax on fireworks. The 2 percent fireworks tax has been in place since October of 2001 and is levied on small fireworks sold to the general public. The fireworks tax is a type of sales tax and is charged in addition to the regular state and local sales tax. This can bring the total sales tax on fireworks up to 10.25 percent in some areas.
Which Sales Are Subject to the Tax?
The fireworks tax applies to all retail sales of fireworks. Texas only allows fireworks to be sold during Cinco de Mayo (sold May 1st through May 5th), Fourth of July (sold June 24th through July 4th), and New Years Day (sold December 20th through January 1st).
The Effect on Retailers
The fireworks tax doubles the tax compliance effort for fireworks retailers operating in Texas. In order to sell fireworks in Texas you need a sales tax permit from the Comptroller’s office and a retail fireworks permit from the Texas Department of Insurance. Sellers of fireworks are also required to file two sales tax returns: a special fireworks tax return and a regular sales and use tax return.
Where Does the Tax Money Go?
The proceeds from the fireworks tax go to a state program that assists rural fire departments.
More information on Texas state taxes