To Tax or Not to Tax? A Slippery Slope for Grocery Exemptions

A bag of potato chips is usually exempt from sales tax when purchased at a grocery store, but if purchased at a deli across the street, it would most likely be subject to sales tax. While grocery exemptions are well-intended, implementation of these policies has proven cumbersome. Most states that levy a general sales tax offer an exemption for groceries, removing qualifying “grocery” products from their sales tax base. However, many states are taking back their grocery exemption for certain categories of goods.

According to taxfoundation.org, many states have removed their grocery exemptions for certain “nonessential” food products. Among the states with full or partial grocery exemptions, 62 percent exclude either candy or soda from the exemption, subjecting those products to sales tax. Although the desire to exempt necessities from sales tax is understandable, applying the sales tax to some products while exempting others, makes tax compliance more difficult.

Learn more about sales taxes on soda, candy and other groceries for 2018 here.