Taxes on Food and Groceries

Tips for Taxes on Food

With the month of November now upon us, there are many who are already preoccupied with Thanksgiving details. Family members and friends, festive fall décor, and fun autumn activities all play a big role in making the season very special. With this said, we all know how much attention must be given in order to make a large family reunion or “friendsgiving” a success, not to mention the money involved. And let’s not forget about that Thanksgiving feast – arguably the most iconic part of the celebration. With turkey, stuffing, and mashed potatoes being staples of the meal, it would be almost impossible to forget about all the grocery shopping you’ll need to do! Perhaps now’s the perfect time to consider the expenses associated with your purchases and whether or not you’re paying an extra pretty penny on taxes.

Generally speaking, food purchased at stores are sales tax exempt, but of course there are exceptions.

Here is a list of tax exempt food and food products (unless sold under specific conditions):

  • Fruits
  • Vegetables
  • Canned goods
  • Dairy products
  • Meat, poultry, and fish
  • Baked good (bread, rolls, cakes, donuts, and pies)
  • Baking ingredients
  • Cookies
  • Cereal and granola bars
  • Snack items (potato chips, pretzels, popcorn, and corn chips – taxable if sugar-coated, chocolate-coated, or candy-coated)
  • Packaged salads sold by the pound
  • Frozen foods (including frozen entrees)
  • Dried fruits, including raisins and craisins (taxable if sugar-coated, chocolate-coated, or candy-coated)
  • Nuts (unless honey-roasted, chocolate, or candy-coated)
  • Food preservatives, food coloring, and sweeteners
  • Fruit snacks
  • Baby food
  • Dietary foods (most of the time)

Food is generally taxable when sold in-store under the following conditions:

  • Heated:
    • Example: Hot soup, hot pizza, hot rotisserie chicken, and warm roasted nuts
  • Sold for consumption within the premises:
    • Examples: Buffet, concession stand, food court, coffee shop within a store, convenience stores, and restaurants
  • Prepared by seller to be eaten on or off premises:
    • Examples: meals on individual plates, salads from salad bars, meals prepared by store by request

Food is generally taxable when sold in-store as the following products:

  • Carbonated drinks
  • Candy and confectionery
  • Sandwiches (hot and cold)
  • Pet foods

Combination of Taxed and Non-Taxed Foods

When food that is not subject to taxes is sold in combination with a taxable good, the entire charge can be taxed (ex: cheese and cutting board). In the same vein, when food is sold in tandem with heated foods on plates or as meals for a single charge, the entire charge is subject to tax. Other examples are trail mix containing chocolate candy, and children’s prepackaged lunches containing deli meat, crackers, and a candy bar sold for a single charge. Similarly, when food is sold in combination with other heated food on plates or as meals for a single charge, the entire charge is taxable.

The next time you’re at the store, consider these tax tips to make sure you’re getting the biggest bang for your buck during the holidays!