Bag laws look like a supply question — order the right bags and you are done. They are not. In three of the four states below the rule reaches your register, your receipt and a return you have to file, and in two of them charging the wrong customer is itself the mistake.
The rules also do not agree with each other. A store of the same size, selling the same goods, gets a different answer in New Jersey, New York, Colorado and California. Two of them turn on how big you are, one turns on how many locations you run, and they disagree about who the five or ten cents even belongs to.
Here is what each actually requires, current as of 1 October 2026.
The four questions that decide your answer
Before the states, the shape of the problem. Every bag law in the country is some combination of four questions, and knowing which one your state leans on tells you where to look.
- Are you a covered store? Some laws cover everyone, some carve out small independents, some only bite above a square-footage line.
- What may you hand over? Plastic, recycled paper, reusable — and “reusable” is a specification, not an adjective.
- Is there a charge, and whose money is it? This is the one that surprises people. In one state there is no fee at all; in another the money is yours; in a third you retain part of it and remit the rest to your town each quarter.
- Who is exempt at the counter? Customers on food assistance, in most fee states — but the evidence you need differs.
Four states, four different combinations.
New Jersey: the answer depends on 2,500 square feet
New Jersey has the strictest bag law in the country, and it is the one most often described wrongly — usually as “New Jersey banned paper bags.” It did, but only for some stores.
Since May 4, 2022, single-use plastic carryout bags and polystyrene foam food service products are prohibited. On paper, the State’s business guidance is precise:
“Single-use paper carryout bags are allowed to be provided or sold, except by grocery stores equal to or larger than 2,500 square feet, which may only provide or sell reusable carryout bags.”
So the dividing line is 2,500 square feet, and it applies to grocery stores. A typical bodega or corner store, under that size, may still hand out paper. A larger self-service grocery may not — for those stores it is reusable bags or nothing.
Reusable is a specification, not an adjective. The same guidance requires a compliant bag to be made of polypropylene fabric, PET non-woven fabric, nylon, cloth, hemp product, or other washable fabric, to have stitched handles, and to be designed and manufactured for at least 125 reuses. A thicker plastic bag with moulded handles does not qualify however sturdy it feels.
If you are near the threshold, measuring is worth an hour of somebody’s time. The consequence of being wrong is not a rounding error — it is the difference between lawfully handing out paper and not being allowed to.
Whose money is the fee? There isn’t one. New Jersey imposes no state bag fee. Whatever you charge for a reusable bag is a sale, priced by you.
New York: it is a fee, and you can charge the wrong person
New York banned plastic carryout bags, and localities may impose a five-cent fee on paper. The part that catches stores is who collects it and from whom.
Per New York State Tax: “Only sales tax vendors that sell tangible personal property in a locality where the fee is imposed must collect the fee when they provide a paper carryout bag to a customer.” The fee is “The five-cent paper carryout bag reduction fee”, applied “to each paper carryout bag provided to a customer by a sales tax vendor of tangible personal property”.
Three operational facts follow, and the last is the one that matters most.
It is remitted, not kept. Vendors report and remit the fee “on Schedule E, Paper Carryout Bag Reduction Fee, which is filed as part of their periodic sales tax return”. So the five cents is a pass-through you are accountable for, and the number you remit should match the number you rang.
Charge more than five cents and the excess becomes a sale. The same page is explicit about it: “If your business charges more than the five-cent paper bag fee, the additional amount charged in excess of five cents is considered a sale of a bag and is subject to sales tax. The five-cent fee must be a separate line item on the receipt or statement of price, and it must be remitted with your sales tax return on Schedule E, Paper Carryout Bag Reduction Fee. The excess amount is reported on your sales tax return in the jurisdiction where the sale is made.”
Read that as two instructions. A store that rounds the bag charge up to a dime because a nickel is awkward at the till has stopped collecting a fee and started selling bags, and owes sales tax on the extra five cents — on every bag, all year, with the excess reported separately in the jurisdiction of the sale. And the five cents has to appear as its own line on the receipt. Folding it into the item price is not a presentation choice; it is the wrong receipt.
You must not charge it to a SNAP or WIC customer. The same page exempts customers using “Supplemental Nutrition Assistance Program (SNAP)” and “Women, Infants, and Children (WIC) Program” benefits, along with government entities. There are also exemptions for certain bags — among them bags for bulk items, newspapers, prescriptions and food preparation.
That exemption is a counter decision, made in a second, by whoever is on the register. No system decides it for you. It is worth putting on a card by the till, because a store that charges the five-cent fee to every SNAP customer is getting it wrong every single time, quietly, all year. If SNAP is a meaningful share of your trade, our guide to EBT, SNAP and food retail covers the wider set of rules that come with it.
Colorado: the small-store carve-out, and a fee you split with your town
Colorado is the state most likely to surprise an independent owner, in both directions.
You may be exempt from the plastic ban entirely. The Colorado Department of Revenue states it plainly: “Certain retail food establishments, and small stores that operate solely in Colorado and have 3 or fewer locations, may provide single-use plastic carryout bags.”
Read the conditions rather than the headline. Operating solely in Colorado, and three or fewer locations. A single-store bodega or a family operation with two or three sites is inside that carve-out; a regional chain, or an operator with a location across a state line, is not.
If you are covered, the fee is ten cents and it is not all yours. Per the same page: “On and after January 1, 2024, a store may furnish only a recycled paper carryout bag to a customer at the point of sale at a fee of 10 cents per bag or a higher fee imposed by the municipality or county in which the store is located.”
And then the part that catches people at year end: “A store is required to remit, on a quarterly basis beginning April 1, 2024, 60% of the carryout bag fee revenues to the municipality or county within which the store is located and may retain the remaining 40% of the carryout bag fee revenues.”
Sixty per cent out, forty per cent retained, quarterly, and to the municipality or county — not to the state. That last detail matters administratively: this is not a line on a state tax return the way New York’s is. It is a separate remittance to your town or county on its own schedule, and the Department of Revenue’s own FAQ opens by confirming the fee is not collected or administered by the Department.
The exemption works differently from New York’s. Colorado states: “The carryout bag fee does not apply to a customer that provides evidence to the store that the customer is a participant in a federal or state food assistance program.”
Note provides evidence. New York’s exemption attaches to the tender — a customer paying with SNAP benefits is exempt because of how they are paying. Colorado’s is written around the customer demonstrating participation. In practice that is a different counter conversation, and it is worth briefing staff on which version applies where you trade.
California: convenience stores are named, and the charge is ten cents
California’s rule changed on January 1, 2026, and unlike the others it names your format explicitly. CalRecycle sets the scope as “Most grocery stores, retail stores with a pharmacy, convenience stores, food marts, and liquor stores”.
From that date it states: “Stores are not allowed to provide customers with a carryout bag at the point of sale that is not a recycled paper bag.”
On price, the same page sets a floor: “These stores may only provide customers with recycled paper carryout bags for a minimum charge of ten cents ($0.10) per bag at:” — followed by the list of checkout counters and self-checkout kiosks it applies to. Plastic carryout bags are gone at the point of sale, including the thicker grade that satisfied the old law.
There is also a labelling requirement that sits with your supplier but shows up on your shelf. The bag must have “printed on the bag the name of the manufacturer, the country where the bag was manufactured, and the percentage of postconsumer content”.
Whose money is it? Yours. California sets a minimum charge rather than a remitted fee, so the ten cents is store revenue against the cost of the bag — a genuinely different arrangement from New York and Colorado, and the reason a single national policy for your registers does not work.
And a date to put in the diary now, because it affects what you should be agreeing with suppliers for next year. Per the same page, from January 1, 2028, “recycled paper carryout bags must contain a minimum of 50% postconsumer recycled materials”.
The four rules side by side
Sources for the table: NJ business guidance, NY State Tax, Colorado DOR and CalRecycle.
| New Jersey | New York | Colorado | California | |
|---|---|---|---|---|
| Plastic carryout bags | Banned since May 4, 2022 | Banned | Banned, except small stores solely in CO with ≤3 locations | Banned at checkout from Jan 1, 2026 |
| Paper carryout bags | Allowed, except grocery stores ≥2,500 sq ft | Allowed, with a 5¢ fee where a locality imposes it | Recycled paper only, 10¢ or higher local fee | Allowed only as recycled paper, min. 10¢ |
| Who the charge belongs to | No state fee | Remitted to the State on Schedule E | 60% to your municipality or county, quarterly; you keep 40% | Retained by the store |
| Food-assistance exemption | — | SNAP and WIC customers, government entities, certain bag types | Customer who provides evidence of participation in a federal or state food assistance program | — |
| What decides if you are covered | Store type and 2,500 sq ft | Whether your locality imposed the fee | Number of locations and operating solely in-state | Store format — c-stores named |
| Next date to watch | — | — | — | 50% postconsumer content from Jan 1, 2028 |
One limit worth stating plainly: these are the four states we verified word-for-word against the state’s own published guidance. Many other states and a great many municipalities have their own bag rules, and local ordinances sometimes sit on top of a state law — Colorado’s own rule expressly contemplates a municipality setting a higher fee. Check your own state and your own city rather than reading across from a neighbour.
What to actually do
- Measure, if you are anywhere near a threshold. New Jersey’s line is 2,500 square feet of store. If you have never measured, you do not know which side you are on.
- Count your locations, and check where they are. Colorado’s carve-out turns on three or fewer locations and operating solely in Colorado. Opening a fourth site, or one across a state line, changes your obligations for every store you own.
- Find out whether your locality imposes the fee. In New York the fee is not statewide — it applies where the locality has imposed it. In Colorado the municipality may set a higher one than ten cents.
- Make the fee a rung item, not a mental note. If it is not on the receipt it is not auditable, and what you remit should reconcile to what you rang. This is the single highest-value change in the whole article, because it is the one that turns a compliance question into a number.
- Know which remittance you are on. New York goes on Schedule E with your sales tax return (NY State Tax). Colorado goes to your municipality or county, quarterly, at 60% (Colorado DOR). Those are different calendars and different payees.
- Train the exemption, not just the charge. New York’s turns on the tender; Colorado’s turns on the customer providing evidence. Both are staff behaviours and both go wrong quietly.
- Ask suppliers for the printed markings if you sell in California — manufacturer, country, postconsumer percentage — and start asking about 50% postconsumer stock ahead of 2028.
- Check reusable bags against the specification rather than the label. New Jersey’s test is material, stitched handles and 125 reuses.
Where the POS fits, and where it does not
A fee only reconciles if it is rung. Ringing it as its own item is what turns a five- or ten-cent charge into a number you can report at all — and in Colorado, into a number you can split 60/40 without guessing. The NRS POS includes downloadable sales reports.
It is worth deciding where the bag button lives before you add it, rather than after. A charge that takes a cashier three taps to apply is a charge that gets skipped at the busy hour, and our guide to setting up your checkout counter is a reasonable place to start on the layout question.
What no system will do is decide the exemption. Whether the customer in front of you is paying with SNAP or WIC benefits, or has shown evidence of participation in a food assistance programme, is known at the register, by a person, in the moment. Build it into the routine rather than expecting software to catch it.
Frequently asked questions
Can I still give out paper bags in New Jersey?
Yes, unless you are a grocery store of 2,500 square feet or more. Those stores may only provide or sell reusable carryout bags.
I run two stores in Colorado. Am I exempt from the plastic ban?
Possibly. The Department of Revenue’s carve-out covers small stores that operate solely in Colorado and have three or fewer locations. Both conditions have to hold — solely in Colorado, and three or fewer.
Do I keep the ten cents in Colorado?
Forty per cent of it. Sixty per cent is remitted quarterly to the municipality or county in which the store is located.
Do I keep the five cents in New York?
No. It is reported and remitted to the State on Schedule E as part of your sales tax return.
Can I round the New York fee up to ten cents?
You can charge more, but the extra is no longer a fee. New York State Tax treats the amount above five cents as a sale of a bag, subject to sales tax and reported in the jurisdiction where the sale is made. The five cents itself must be a separate line item on the receipt.
Do I charge the New York fee to a customer paying with SNAP?
No. Customers using SNAP or WIC benefits are exempt, as are government entities. Certain bags are also outside the fee, including bags for bulk items, newspapers, prescriptions and food preparation.
Is the Colorado exemption the same as New York’s?
Not quite. Colorado’s applies to a customer who provides evidence to the store of participation in a federal or state food assistance program. New York’s attaches to customers using SNAP or WIC benefits.
Is the fee statewide in New York?
No. It applies in a locality that has imposed it, and only sales tax vendors in that locality collect it.
Does California’s rule apply to a convenience store?
Yes. CalRecycle names “convenience stores, food marts, and liquor stores” alongside grocery and pharmacy retail.
Can my town charge more than ten cents in Colorado?
Yes. The state rule is ten cents “or a higher fee imposed by the municipality or county in which the store is located.”
Can I use up my old plastic bags?
No. These rules are written around providing or selling the bag, not around when you bought it.
Is a thick plastic bag “reusable”?
Not in New Jersey. The specification requires washable fabric, stitched handles and design for at least 125 reuses.
Key takeaways
- New Jersey turns on 2,500 square feet. Under it, paper is still allowed; a grocery store at or above it may only provide reusable bags.
- “Reusable” is a spec: washable fabric, stitched handles, designed for at least 125 reuses.
- Colorado carves out the small independent. Per Colorado DOR, small stores operating solely in Colorado with three or fewer locations may still provide single-use plastic bags.
- Colorado’s fee is split. Sixty per cent to your municipality or county, quarterly; you keep forty.
- New York’s five cents is a remitted fee, reported on Schedule E with your sales tax return — not store income.
- Charge more than five cents in New York and the excess is taxable as a sale of a bag, and the five cents has to be its own line on the receipt (NY State Tax).
- Do not charge the fee to customers on food assistance — but check which version applies. New York’s turns on the tender, Colorado’s on the customer providing evidence.
- California has named convenience stores since January 1, 2026 — recycled paper only at checkout, minimum ten cents, and the ten cents is yours.
- California bags must carry printed markings: manufacturer, country of manufacture, postconsumer percentage.
- Diarise January 1, 2028 for California’s 50% postconsumer content requirement.
- Check your own state and city. Four states are verified here; local ordinances often sit on top of state law.
