States Taxing Groceries
Forty-five U.S. states impose a sales tax. Of those, 13 have a grocery tax: Alabama, Arkansas, Hawaii, Idaho, Illinois, Kansas, Mississippi, Missouri, Oklahoma, South Dakota, Tennessee, Utah, and Virginia.
Grocery Tax Revenue Impact
Food prices are expected to rise 2.5% to 3.5% in 2022. Thirteen states charge taxes on groceries, providing revenue for states to fund departments like education and transportation. Some states offer lower rates or rebates.
Highest Grocery Tax Rates
Mississippi applies a 7% sales tax to groceries, the highest in the country. Seven states adopted a reduced rate below the general sales tax rate.
No Sales Tax States
Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. North Carolina exempts grocery items from state sales tax but not local taxes of 2%.
Other States Taxing Groceries
Thirteen of the 45 states with a sales tax charge taxes on groceries. Among those 13, some states offer lower tax rates on food or a rebate for you to claim on your tax return. Alabama applies the whole state sales tax rate of 4% to food and groceries.
Local Sales Tax Consideration
Several states have no statewide grocery tax but allow local taxes. Some other states tax groceries at a reduced rate. Three states that tax groceries enable residents to offset the cost with tax credits.
State-Specific Grocery Tax Policies
Arkansas, Illinois, Missouri, Tennessee, Utah, Virginia, and West Virginia adopted a reduced tax on groceries below the general sales tax rate.
Sales Tax Variations
North Carolina exempts grocery items from the state sales tax but subjects them to a uniform reduced local tax rate of 2%.
Sales Tax Overview
California has the highest state sales tax rate at 7.25%. Tennessee, Indiana, Mississippi, and Rhode Island tie for the second-highest rate at 7%.
State Tax Rates
Alabama, Georgia, Hawaii, New York, and Wyoming follow with 4% rates. Colorado has the lowest non-zero state tax at 2.9%.
Combined State and Local Rates
Some cities and counties add extra sales taxes on top of state taxes. Combined state and local rates are highest in Tennessee (9.55%), Arkansas (9.53%), Louisiana (9.45%), Washington (9.23%), and Alabama (9.22%).
Highest Combined State and City Tax Rate
Lake Providence, Louisiana, has the highest combined state and city rate at 11.45%.
No Sales Tax States
Five states have no sales tax: Delaware, Alaska, Montana, Oregon, and New Hampshire. But some cities in those states collect local sales taxes.
Kansas Grocery Tax
Kansas taxes groceries at 6.5%. Legislation proposes eliminating grocery taxes but has not yet passed. Kansas offers tax credits up to $125 per person for households meeting income and age/disability requirements. But this may not benefit lower-income families.