This Cream-Cheese Stuffed Bagel Is a Tax Loophole

Philadelphia created a uniquely-schmeared bagel that avoids New York's controversial "bagel tax."

Philadelphia and H&H Bagels Tax-Free Bagel

Courtesy of Philadelphia

Whether you know it or not, every time you order a bagel slathered with cream cheese at a New York City deli or bodega, you're subject to an additional tax. And yet if you were to purchase those items separately — i.e. a tub of cream cheese and a single, unsliced bagel — no "bagel tax" would be levied.

If that sounds quibbling to you, well, frankly, it is. The idea is that a whole bagel (i.e. one you might buy at a grocery store) is a grocery item to be consumed, ostensibly, at home, and thus exempt from NY state sales tax. Once the bagel has been sliced at the time of order — and whether you put cream cheese or butter on it or not — it is then considered a prepared food (i.e. like something you'd order at a restaurant), hence it can be taxed as such. It's all there in the New York tax code.

But since the state started cracking down on its bagel-related tax code enforcement in 2010, the issue has been the source of outrage. And now one famous cream cheese brand is saying enough is enough, offering New Yorkers a bit of a tax break, so to speak, by turning their morning bagel into a tax loophole.

This Friday through Tax Day, New Yorkers can indulge in a bagel with cream cheese inside that isn't subject to the state's sandwich tax, thanks to Philadelphia and bagel chain H&H Bagels. The Tax-Free Bagel skirts the slicing and schmearing aspect but putting cream cheese filling right inside the bagel itself. (Think those bagel bites you get at some coffee shops, except, you know, a whole bagel.)

“In today’s landscape, people are juggling enough hurdles, and having to pay an extra tax to enjoy their favorite bagel with Philly cream cheese should simply not be one of them,” Keenan White, Senior Brand Manager, Philadelphia at Kraft Heinz Company, said. “A bagel with Philly cream cheese is an experience that so many know and love, so in partnership with H&H bagels, we wanted to provide a delicious solution to this silly tax in a way that kept the enjoyment of our brand at its core, literally.”

The bagels will be available at H&H Bagels' Manhattan locations from Friday, April 14 through Tuesday, April 18 and come in plain, everything, and cinnamon raisin varieties (all stuffed with plain Philadelphia cream cheese). The Tax-Free bagels will cost $1.90 each.

For non-New Yorkers, the bagels will also be sold nationwide online by the half dozen, plus six standard bagels and overnight shipping, for $54 while supplies last. Find more info at

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