Updated August 23, 2016
Selling grocery items online is a growing niche, but one notorious pitfall is the fact that various different states tax grocery items differently. For example, groceries are taxable at the normal rates in Alabama, but totally exempt in Arizona. But in Georgia groceries are not subject to the state’s 4% sales tax rate but are subject to local sales tax rates! Confusing, right?
If you sell online and have nexus in various states, you are required to keep up with all these rules or risk unhappy buyers wondering why you charged them sales tax.
This list will help you sort out which states consider grocery items tax exempt. If a state isn’t on this list, then it considers grocery items fully taxable at the combined local rate. We’ll also show you how to collect the right amount of sales tax in every state whether you have your own shopping cart or sell on a platform like Amazon FBA.
As always, sales tax is subject to change very rapidly. If you see anything on this list that needs updating, just let us know by leaving a comment on this post.
States Where Grocery Items are Tax Exempt
Keep in mind that this list refers to non-prepared grocery food. In some cases, items you buy at the grocery store such as soft drinks, candy and confection are not tax-exempt or are taxed a different rate. Also note that foods prepared for consumption at a grocery store are taxable in all states.
Pro Tip! If you sell on Amazon FBA, make sure you set up the correct product tax codes so Amazon knows how to charge sales tax on your grocery items in each state.
Arizona – grocery items are tax exempt
Arkansas – Grocery items are not tax exempt, but food and food ingredients are taxed at a reduced Arkansas state rate of 1.5% + any local rate. (Search local rates at TaxJar’s Sales Tax Calculator.) Any food items ineligible for the reduced rate are taxed at the regular state rate. This state rate will fall from 1.5% to 0.125% if certain budget conditions are met.
California – Grocery items are tax exempt
Colorado – grocery items are exempt, though certain items are taxable including carbonated water, chewing gum, seeds and plants to grow food, prepared salads and salad bars, cold sandwiches, deli trays, candy, soft drinks and hot/cold beverages served in unsealed cups through a vending machine.
Connecticut – grocery items are tax exempt
Florida – grocery items are tax exempt
Georgia – Georgia does not require sales tax on grocery items, but this exemption does not hold for any local (county, city, etc.) taxes. Further, the exemption for “food and food ingredients” does not include prepared food, alcoholic beverages, dietary supplements, drugs, over-the-counter drugs, or tobacco.
Illinois – Grocery items are not tax exempt, but they are taxable at a reduced rate of 1%. Candy, soft drinks, alcoholic beverages, and food prepared for immediate consumption do not qualify for the 1% rate.
Indiana – grocery items are tax exempt
Iowa – grocery items are tax exempt
Kentucky – Food and food ingredients are exempt from sales tax. This exemption does not include candy, tobacco, alcoholic beverages, soft drinks, dietary supplements, prepared food or any food sold through vending machines.
Louisiana – food sold for preparation and consumption in the home is tax exempt at the state level, though counties and other local jurisdictions may levy a tax
Maine – The exemption for food products for home consumption is limited to Maine’s definition of “grocery staples.”
Maryland – grocery items are tax exempt
Massachusetts – grocery items are tax exempt
Michigan – grocery items are tax exempt
Minnesota – grocery items are tax exempt
Missouri – Grocery items are taxable, but taxed at a reduced rate of 1.225%.
Nebraska – grocery items are tax exempt
Nevada – grocery items tax exempt
New Jersey – grocery items are tax exempt
New Mexico – grocery items are tax exempt
New York – While grocery items are tax exempt, New York has some interesting considerations and exceptions. Click here for a list of what grocery items are and are not tax exempt in New York.
North Carolina – Sales of grocery items are exempt from North Carolina state sales tax, but still subject to local taxes.
North Dakota – grocery items are tax exempt
Ohio – grocery items are exempt if sold for off-premises consumption
Pennsylvania – grocery items are tax exempt, and in Pennsylvania, this includes candy and gum but not alcohol.
Rhode Island – grocery items are tax exempt
South Carolina – Unprepared food that can be purchased with federal food stamps is exempt from state sales and use tax, but may be subject to other local sales and use taxes.
Tennessee – grocery items and ingredients are taxable, but taxed at a reduced rate of 5%.
Texas – grocery items are tax exempt
Utah – This is one of the more confusing states when it comes to taxing groceries. Grocery items are taxable, but taxed at a reduced rate of 1.75%. Though, if a transaction includes both food/ingredients and other taxable items of tangible personal property then the taxable rate is 4.65%.
Vermont – grocery items are tax exempt
Virginia – grocery items are taxable, but taxed at a reduced rate of 1.5% + a 1% local option tax in applicable areas
Washington – grocery items are tax exempt
Washington D.C. – grocery items are tax exempt
West Virginia – grocery items are tax exempt
Wisconsin – grocery items are tax exempt, though some snack foods are excluded from this exemption.
Wyoming – food for domestic home consumption is exempt
Collecting Sales Tax on Grocery Items
If you sell grocery items online, the TaxJar SmartCalcs sales tax API has your back. Just use product code 40030 to indicate grocery items and we’ll ensure you collect the right amount of sales tax on all of the grocery items you sell, no matter if the groceries are taxable, tax exempt or taxed at a reduced rate.
Try an interactive demo of the TaxJar SmartCalcs sales tax API here.
How does selling tax-exempt grocery items affect Amazon sellers?
The key for Amazon sellers is to ensure that you are coding your products correctly in Amazon seller central. We posted before a guide to coding your SKU’s in Amazon FBA, and how to change your product tax codes in Amazon. Once you’ve coded your SKU’s correctly, you should be all set.
If you need help beginning to set up your tax codes in Amazon Seller Central, download our free Amazon Sales Tax Quick Reference Guide.
We hope this guide to states in which grocery items are tax exempt has helped you. Do you have any questions? Start the conversation in the comments.