Federal Gift Shop Tax Act Allows States to Add Sales Tax to Smithsonian Souvenirs and National Park Purchases

The newly introduced Federal Gift Shop Tax Act is short, sweet, and has one clear mission: to let states charge sales tax on purchases made at gift shops located on federal property. Historically, sales on federal land have been exempt from state taxes, but this bill changes that, opening up a new revenue stream for state and local governments.

The End of the Federal Tax-Free Souvenir

What does this bill actually do? In plain English, it gives states the green light to impose their regular sales tax on anything you buy at a gift shop situated on property owned, leased, or occupied by the U.S. government (Section 2). This covers everything from a National Park Service gift shop to the museum stores at places like the Smithsonian Institution, the National Gallery of Art, and the U.S. Holocaust Memorial Museum. If you’re buying a $20 t-shirt at the Air and Space Museum, that purchase is about to get a little pricier, depending on the local sales tax rate.

Hitting the Online Cart, Too

Crucially, this isn't just about in-person purchases. The bill defines a “qualifying purchase” as an item bought inside the physical gift shop or bought online directly through that gift shop’s website. This means if you live in New York and order a book from the official Grand Canyon gift shop website, that purchase is now subject to the New York sales tax, just like any other online retailer. This closes a small but specific loophole in the tax code, ensuring that these federal-land retailers are treated more like their private sector counterparts down the street.

Who Benefits, and Who Pays?

For state and local governments—meaning all 50 states, D.C., territories like Puerto Rico, and the local county or city governments—this is a clear win. It provides a new, specific source of tax revenue that they previously couldn't touch. Given the millions of visitors these federal sites attract annually, those sales tax dollars could add up quickly, helping to fund local services. However, the cost is borne entirely by the consumer. Whether you’re a tourist buying a magnet or a local resident ordering a specialty item online, you will now be paying the state sales tax on top of the price tag. This translates to an immediate, though small, increase in the cost of goods for anyone shopping at these specific locations.