Sales Tax on Groceries by State
Updated: August 26, 2024 In this storyZamp Learnings:
Grocery items like bread and vegetables are exempt from sales tax in most US states. But before you set every consumable you sell as “non-taxable,” let’s dig into the nitty-gritty of sales tax on grits (and other groceries).
We'll answer all of your sales tax questions & address any of your concerns to ensure that you never have to worry about sales tax again
Like all taxes, sales tax is political. States often exempt tax on necessities like food, medicine, and sometimes even clothing. In fact, studies have shown that the most food-insecure US counties are the ones that still levy a sales tax on groceries. A recent US trend has states like Virginia and Kansas either phasing out or abolishing the state sales tax on groceries altogether.
Currently, 15 US states have some form of sales tax on groceries.
Several of these states have no statewide sales tax on groceries but allow local areas to still require a sales tax on grocery sales. For example, in Georgia, groceries are not taxable at the state level. However, individual counties and other jurisdictions are still allowed to require sales tax on grocery purchases.
When buying a loaf of bread in Cherokee County, Georgia, you would not be required to pay Georgia’s 4% sales tax rate. But you’d still be required to pay the 2% Cherokee County special local option tax.
Some other states tax groceries, but at a reduced rate. Missouri, for example, taxes groceries at a reduced state sales tax rate of 1.225%. But again, local areas in Missouri are also allowed to tax groceries. Additionally, a few states, like Oklahoma, tax all grocery items but allow for exceptions for nonprofits purchasing and selling grocery items.
Not everything sold at a grocery store qualifies for a sales tax exemption. As with all things sales tax, each state gets to make its own rules and laws, including which items are considered grocery items and thus tax exempt.
Many state laws say that anything that can be bought with either state or federal Supplemental Nutritional Assistance Program (SNAP) benefits (AKA food stamps) qualifies as groceries and are tax exempt.
But generally, food seen as unhealthy or without nutritional value, such as candy and soft drinks, is still taxed, even in states where groceries are generally tax-exempt. Alcoholic beverages are generally always taxable and may also be subject to an additional excise tax.
Prepared food (sometimes also called “food ready to eat”) is generally always subject to sales tax. However, states can get so granular that sometimes they consider food items “ready to eat” if they are sold with utensils but “grocery food” (and therefore non-taxable) if they are sold without utensils.
The key takeaway is if you sell foods and beverages and have sales tax nexus in a state where groceries are non-taxable, always double-check to be sure that the actual items you sell qualify for the state’s sales tax exemption.
Several states, including Idaho, South Dakota, Oklahoma, Mississippi, and others, require consumers to pay sales tax on groceries. Other states tax groceries at a reduced rate or charge them at the local level.
Below is a list of states and how they tax grocery items. Be sure to understand each state’s definition of “groceries” when deciding when (and when not) to collect sales tax on food items.
Below is a list of states and how they tax grocery items. Be sure to understand each state’s definition of “groceries” when deciding when (and when not) to collect sales tax on food items.
| State | Are Groceries Taxable? | Notes |
|---|---|---|
| Alabama | Yes | - |
| Alaska | No, but local tax rates may apply | Alaska has no statewide sales tax, but local tax rates may apply |
| Arizona | No | - |
| Arkansas | Yes, but at a reduced rate | Grocery items are taxed at a rate of 1.5% plus any applicable local sales tax |
| California | No | - |
| Colorado | No | - |
| Connecticut | No | - |
| Florida | No | - |
| Georgia | No, but local tax rates may apply | Local areas (counties, cities, etc.) in Georgia are allowed to require sales tax on groceries |
| Hawaii | Yes | - |
| Idaho | Yes | - |
| Illinois | Yes, but at a reduced rate, and local tax rates may apply | Groceries in Illinois are taxed at a reduced rate of 1%. Illinois local areas (cities, counties, etc.) are allowed to require sales tax on groceries. (Illinois Revenue) |
In conclusion, several states charge sales tax on groceries. Some offer a reduced rate, while others leave the decision to local lawmakers. There may be exceptions in every state as to what is charged and not charged, from certain food ingredients to prepared food.
We'll answer all of your sales tax questions & address any of your concerns to ensure that you never have to worry about sales tax again
