Posted on June 19, 2019
Most states do not impose sales tax on the purchase of grocery items. However, items that are considered sold for on-premises or for immediate consumption are generally taxable items. The following chart depicts a list of states that charge tax on grocery purchases: Alabama, Arkansas, Hawaii, Idaho, Illinois, Kansas, Maryland, Maine, Missouri, Mississippi, Oklahoma, Pennsylvania, South Dakota, Tennessee, Utah, and Virginia.
One might assume that all vending machine purchases are taxable since they are meant for immediate consumption, however, vending machine transactions are tax exempt in some states. Interestingly, Maine does not charge tax on vending machine purchases even though the state generally charges 5.5 percent tax on grocery purchases. That seems contradictory since the general rule is that food meant for home consumption should be exempt and food meant for immediate consumption should be taxable. Maine does offer exemption for some grocery items such as follows: bread, bread products, jam, jelly, pickles, honey, condiments, maple syrup, spaghetti sauce or salad dressing when packaged as a separate item for retail sale. (Me. Rev. Stat. Ann. 36 §1752(3-B))
If you are a notorious snacker and you live in Florida, you may be able to avoid being taxed every twenty minutes when you get the urge to chew. When you do your grocery shopping, look for foods that are easy to pack and bring with you to work or elsewhere. You must be careful though, because not all foods are considered “groceries.” The exemption does not apply to certain foods including: foods sold in restaurants, certain prepared foods sold ready for immediate consumption, soft drinks, frozen dairy or nondairy products, and candy. (Fla. Stat. § 212.08(1)(a))
However if you are content to continue chewing on tasty, perhaps not-so-healthy treats, you should still make yourself aware of local tax laws. Simply because groceries are exempt or non-taxable in a state does not mean that foods considered to be candy are exempt as well. In fact, in the District of Columbia, candy is exempt—but with limitations. Candy bars (fewer than six) purchased for immediate consumption are taxable when purchased with cash but exempt when purchased with food stamps. (D.C. Mun. Regs. 9 § 443.10)
Furthermore, it is important to understand what a state considers to be candy. For example, in New Jersey, candy is taxable however certain snacks—that are suspiciously like candy—are considered to be exempt from the candy tax. Examples of exempt items include KitKats, Twix, licorice, Tootsie Rolls, Nestle Crunch and Milky Way (Explanations: NJ: 21,660 Food and Grocery Sales; Notice, Division of Taxation, 7/27/2005; Notice, Division of Taxation, 7/27/2005). These “foods” are exempt from sales tax because they contain flour which according to New Jersey, disqualifies them from being categorized as candy.
Along with a tax on specific foods, some states have a tax on certain drinks. For example, Pennsylvania does not impose a soda tax at the state level. However, the city of Philadelphia does charge taxes on sugar-sweetened beverages. The city charges distributers a tax of $0.015 per fluid ounce of a sugar-sweetened beverage. (Philadelphia City Code Philadelphia City Code 19-4103). Similarly, Oakland, California charges a general tax for the privilege of distributing sugar-sweetened beverages of $0.01 per fluid ounce. (Law § 4.52.030 -- Excise Tax). An equivalent tax in Cook County, Illinois, was repealed in December of 2017. (Cook County Government, Sweetened Beverage Tax Repealed, 10/13/2017).
In short, whether you are a business owner or consumer, it is important to stay apprised of current tax laws within your city and state. To empower our clients, Allyn wants to share its knowledge of tax laws from a professional consulting standpoint. We accomplish this duty by continuously engaging with all levels of jurisdictional taxation. Allyn employees critically examine legislative language to identify the appropriate actions for any business.
Tips for the Taxpayer
As a business owner, be sure you are knowledgeable of the taxability of the items that you sell and have an accurately updated point of sale (POS) system. Also, stay informed of any changes and their effective dates pertaining to your local tax laws applicable to food and beverage items.
Managing sales and use tax throughout the U.S. can be time-consuming and tedious. Sorting through various tax laws and research can be cumbersome. Utilizing a tax professional as a consultant or to manage the entire process will allow you to focus your efforts on running your business.
For More Information
If you are interested in learning more about this topic or other tax topics, please visit our Tax Publications under News and Events at www.allynintl.com.
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Allyn’s tax team is staffed with seasoned tax professionals experienced in all aspects of Federal, multi-state and local sales and use tax compliance and consulting for large US and global corporations. We use that experience to your advantage.
Allyn files sales and use tax returns in every US taxing jurisdiction. We can manage your entire sales tax return filing process, review the compliance for your company in all the states in which you operate, and provide audit defense for your company. Our significant expertise as consultants in this area means you can focus on your core business while we focus on ensuring you are paying your fair share in sales and use taxes and not a penny more.
Contact us and we can provide a customized cost-effective solution to meet your company’s needs. For further information on Allyn Tax services, please contact firstname.lastname@example.org.
Contributor: Abra Moore
About Allyn International
Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China and Prague, Czech Republic. For more information, visit www.allynintl.com.