State-by-State Guide: Understanding Sales Tax on Groceries, Prepared Food, and Restaurant Meals

• Sales tax on food varies by state in the U.S.
• Basic grocery items are often tax-exempt, but prepared or hot food is usually taxable.
• Tax rules differ by state and locality, with some local jurisdictions having additional rules.
• Online and multistate sellers must be aware of economic nexus requirements.
• Grocery items like bread and dairy are often exempt or taxed at a reduced rate.
• Prepared food, including hot meals and items served with utensils, is typically taxable.
• Restaurant meals are generally taxed at the full rate.
• Bakery items may be exempt unless consumed on-site or sold with utensils.
• Convenience store food ready to eat is usually taxed, while packaged groceries are often exempt.
• Non-alcoholic beverages and dietary supplements are generally subject to full sales tax.
• State-by-state examples include:
• Alabama: 3% grocery tax, reducing to 2% in 2025, prepared food taxable.
• Alaska: No state sales tax, but local taxes may apply.
• Arizona: Grocery tax exempt, prepared food taxable.
• Arkansas: Groceries taxed at 0.125%, prepared food taxable.
• California: Grocery items exempt, hot food taxable.

Source: taxually.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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