They found a bagel loophole.
Unbeknownst to most New Yorkers, we get slapped with the standard 8.875% city and state sales tax each time we buy a bagel that’s sliced and schmeared.
According to the state Dept. of Taxation and Finance, a buttered bagel, or one with lox and cream cheese, is considered a “prepared sandwich” and subject to the unappetizing levy.
But just in time for income-tax deadline day, Philadelphia Cream Cheese and famed H&H Bagels have figured out a way to circumvent the sandwich tax.
They’ve created an unsliced bagel with cream cheese already inside. No slicing, no schmering and no tax.
The tax-free bagels are being offered through April 18 in full-size plain, sesame and cinnamon raisin flavors, with plain cream cheese.
They are priced at $1.90, less than half the $4.46 H&H usually charges for a taxed, sliced and cream cheese-schmeared bagel.
“The nice thing about the tax-free bagel is that it’s pre made,” said Upper West Sider Brad Shaw, 57, who spoke to The Post while buying an everything bagel at H&H’s on Columbus Avenue. “You get in and out and it’s cheaper. Everything a New Yorker wants.”
H&H, which has five locations in the Big Apple, had the idea to use a pastry tool to stuff the bagels. They determined the amount of cream cheese to use by weighing a schmeared bagel.
“It took about two weeks of product testing, just trial and error,” said director of bakery operations JD Gross, who came up with the piping process.
“Once it’s completed, they’re refrigerated and then we heat them in a convection oven for only two minutes, and then they’re ready to go,” said Ryan Klepper, director of restaurant operations.
“It was a pleasant surprise,” said Karly Penner, 37, at H&H on Columbus Friday. “We live in Texas. Tax laws are very different there.”
Klepper said most people are unaware of the sandwich tax.
“I did not know about this tax at all,” said Upper West Sider Susmita Ghose, 26. “I had no idea.”
“Even when I got into the bagel business, I was surprised to see that you could buy a quarter pound of cream cheese and a plain bagel and pay no tax, but if you put that cream cheese on a plain bagel, now it was subject to tax,” Klepper said.
