After a month of turkey, gravy, ham, roasts, stuffing, cookies, cakes, pies, and more, many people start the new year resolved to join a gym and shed those pounds gained during the holiday season. Some states will make this resolution easier to keep, from a sales tax standpoint at least, while others might view your weight loss as their tax gain.
Several states do not apply sales tax to gym and fitness club memberships. Illinois does not tax membership fees, considering them intangibles. However, if that membership entitles a customer to receive an item of tangible personal property, or a service and tangible personal property incident to that service, that could result in a retailer’s occupation tax or service occupation tax liability. North Dakota does not tax basic gym membership dues or fees, unless the purpose of the fitness center is provide opportunities for recreational activities like racquetball, tennis, basketball, or swimming. Other states where you can shed weight and sales tax liabilities are Maryland and California.
Adding personal training services and classes to the pile can change the nature of the tax scheme. For example, Vermont imposes a sales tax on charges for gym memberships but not gym classes; if classes cost extra on top of a membership, those classes are not taxable if billed separately. Minnesota also doesn’t impose a sales tax on fees for personal trainers and yoga classes, but it does charge tax for gym memberships with access to trainers and classes. Interestingly, Texas imposes sales tax on gym memberships, unless they were purchased with a doctor’s prescription.
For those looking to shed weight and tax liability, Maryland and California do not impose sales tax on membership fees for health or athletic clubs.
If using your brain power to calculate the sales tax implications of a new gym membership hasn’t burned enough calories, you could also consider the property tax implications.
Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: How does your state tax gym memberships?
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