AUGUSTA, Maine — The Maine Legislature hailed a two-year budget passed earlier this year as a $71 million tax cut, but you may not notice it when you get your grocery receipt in 2016.
In June, the state estimated that the budget’s changes — which include income and property tax relief — would lower taxes for 580,000 families.
But it was paid for, in part, by keeping the sales tax at 5.5 percent instead of letting it revert to 5 percent as stipulated by the previous budget. When the Legislature did that, it also broadened sales and meals taxes to capture more food products.
Most of what you probably buy at the grocery store is tax-exempt, but as of Jan. 1, 2016, taxes will apply to more items, including potato chips, ice cream and sports drinks. Those changes are expected to generate $9.5 million in revenue in 2016, said David Heidrich, a spokesman for Maine’s tax department.
A deeper dive into the soon-to-be-taxed foods, however, is a journey into idiosyncrasy. Here are five ways that the changes will divide your cart.
Six or more bagels won’t be taxed, but six doughnuts will.
Now, Maine has a “six-doughnut rule” at the store: Items in the bakery case prepared by the retailer are taxed, unless you buy six or more.
After the change, those dessert and bakery items — including doughnuts, cookies and pastries — will be taxed regardless of quantity, while bagels, English muffins and rolls will be tax-exempt when six or more are sold.
Peanut butter won’t be taxed. Salted peanuts will.
It appeared that peanut butter would be taxed in the original budget plan, but it won’t be. Raw nuts also are exempt, but the tax will hit all “nuts and seeds that have been processed or treated” by salting, spicing, smoking, shelling, roasting “or other means.”
Jam won’t be taxed, but Marshmallow Fluff will.
For a tax-free sandwich, hold the Fluff and Nutella: They’ll be considered taxable “confectionery spreads,” a category also including frosting and gel icing. Jams, jellies and preserves remain exempt.
Dip will be taxed, but powdered dip mix won’t be.
Not only will potato and tortilla chips be taxed now, so will just about all of their companions, including salsa, hummus and other dips.
You can avoid the tax if you put in a little more effort, though: Powdered dip mixes are still considered exempt staples and the state says a “spread” isn’t a “dip,” so keep smearing Philadelphia Cream Cheese on that bagel.
Beef jerky will be taxed, but pepperoni won’t.
State guidance says “meat sticks,” “meat jerky” and “meat bars” will be taxed in 2016, but slices and logs of sausage and pepperoni are exempt.