Nine Unusual Sales Taxes Taking a Bite Out of Your Wallet

With treasuries bleeding red ink, state governments are finding creative ways to raise funds. Given the slow economic recovery, this tax strategy will become more the norm, Carla Yrjanson, vice president of Tax Research and Content for Thomson Reuters told WalletPop in email interviews. "With government further relying on sales taxes to address budget shortfalls, consumers can expect to continue to see many more quirky tax laws in the years to come."

Here are nine of the most unusual state taxes that Thomson Reuters found in 2010:Colorado: Some Food Packaging Not Essential
As of March, the Centennial State eliminated the tax exemption for non-essential food items and packaging that can come with your food or beverage purchased at your local eatery or convenience store. So while cups are considered essential, cup lids are not and, hence, are taxable. French fry sleeves are not taxable but expect to pay sales tax on napkins and towelettes.

Indiana: The Hoosier State Scares Up Some Extra Cash
The next time Halloween comes around, Indiana residents may be better off buying a pre-made costume. Indiana's Department of Revenue decided just before Oct. 31 that sales tax could be applied to labor and design of custom-made costumes due to existing law about "retail unitary transactions." In other words, a combined sale of tangible personal property and services becomes taxable when the services are performed before the transfer of the property.

Kansas: Balloon Rides Rising in Cost
Under federal statutes, state or local governments can't taxes airlines and airport users. But in Kansas, taxes can be imposed on "any place providing amusement, entertainment or recreation services." In June, the state's Department of Revenue concluded that the sales tax could be applied to tethered hot air balloon rides only.

Kentucky: Candy Not Such a Sweet Deal
A sweet tooth in the Bluegrass State can get expensive. Candy that does not contain flour faces a sales tax, while candy with flour is exempt. Hence, residents hankering for chocolate-covered almonds will pay a little more than those buying chocolate covered pretzels.

Maine: Boat Sales Are Better For Out of Towners
After an uproar about how non-residents could buy boats and repair parts tax-free if they moved their boats out of state within 30 days of purchase and kept them out, Augusta lawmakers amended the law. Starting August 1, non-residents have to pay 40% of the sales tax if they brought their boats back into the state or kept them in Maine for more than 30 days. Residents, however, remain out of luck: they must pay the full sales tax on the sticker price of the boat and repair parts.

New York: Not All Bagels Are Created the Same
Ask a New Yorker what are the best bagels in the city and you'll get some impassioned answers. Just be careful where you eat it. Once a bagel shop staff slices that bagel, it's considered prepared food even if you don't ask for a schmear of cream cheese and is subject to sales tax. As a result, bagel lovers can end up paying some 8-to 9-cents extra per bagel.

New York: Visiting a Haunted House Can, Well, Haunt You
For many families, a haunted house visit during Halloween is a tradition. But beware: The Empire State requires visitors to pay a sales tax in order to be spooked.

Texas: A Fine Line When it Comes to Clothing
Fashionable Texans are paying more for certain items of clothing these days. Buy a belt and it's tax-free. But shop for a belt buckle and expect to pay a sales tax. Cowboy boots and hiking boots are exempt, but rubber boots and climbing boots are taxable.

Wisconsin: The Badger State Takes The Cake
Before October 2009, ice cream cakes were taxable only when sold for consumption at the store or ice cream shop. Once the state became a member of Streamlined Sales and Use Tax Agreement, ice cream cakes and bars in which the retailer mixes ice cream and at least one other food item together becomes "prepared food" and is taxed. Yet, if it is made by someone other than the retailer, it's not taxable unless it is considered a prepared food because, for example, it came with utensils or napkins.