Find Out Which 10 States Tax Groceries

Highlights

• There are ten states in the U.S. that have a grocery sales tax. This tax adds directly to your food costs and can affect how much you spend at home.
• The state sales tax rates for grocery items vary across different states. Some states charge lower rates or exempt certain food items.
• Money collected from grocery taxes often goes to state governments to fund services like schools and local programs.
• People with low incomes may receive tax credits or SNAP benefits to help offset the extra costs from grocery taxes.
• Some states have made changes to reduce or eliminate grocery taxes to ease the burden on residents.
• To shop smart in different places, it is important to know grocery tax rates, especially in states with special food tax rules.

Introduction

Are your grocery bills rising because of taxes on food? In the United States, each state has its own rules about taxing groceries. In some places, people pay tax on items like bread and milk, while in others, these essentials are exempt. If you live where grocery sales tax applies, it can tighten your budget, especially when food prices increase. Knowing about these tax rates helps you save money and plan spending better. Let’s explore how grocery taxes affect what you pay and which 10 states still apply sales tax to groceries.

Grocery Taxes in the United States

Grocery taxes vary depending on where you live. State laws determine how much tax is added when you buy food at the grocery store. Many states do not tax groceries, while some apply normal or reduced tax rates to food items. Some states use grocery taxes to fund essential services, while others aim to ease the burden on basic needs.

Prepared foods, alcoholic drinks, and some grocery items may still be taxed even in states that generally exempt groceries. Knowing your state’s rules helps you understand the true cost of food.

What Is Considered a Grocery Tax?

A grocery tax is a charge on food purchased for home consumption, typically items not eaten immediately, such as bread, vegetables, and dairy. These often carry the same sales tax rate as other goods. In some states, “unprepared foods” are taxed as groceries.

Alcoholic beverages and prepared foods usually follow the regular sales tax rate. However, each state can define this differently, sometimes based on whether utensils are included with the food.

Grocery tax rates range from as low as 1% in some states to as high as the full sales tax rate of about 7% in others. This results in varying grocery costs across states.

Why Do Some States Tax Groceries?

States collect grocery taxes to fund schools, roads, and other public services. For example, Alabama uses grocery tax revenue to support its Education Trust Fund.

According to the Tax Foundation, some states rely heavily on grocery taxes because they have limited revenue sources. Local governments may also add sales taxes to groceries. Tax credits and exemptions help reduce the burden for low-income families.

The decision to tax groceries often balances economic needs against fairness for consumers. States like Mississippi and South Dakota continue to tax groceries despite public disagreement, highlighting tensions between revenue and equity.

The 10 States That Tax Groceries

Although many states are reducing or eliminating grocery taxes, ten still apply sales tax to grocery foods. Rates vary from reduced percentages to the full sales tax. Examples include Alabama, Mississippi, and Utah.

Each state manages grocery taxes differently, some with reduced rates, others allowing local taxes to add on top. This affects grocery costs and household budgets.

The States With Grocery Taxes

Spotlight on Key States With Grocery Taxes

Alabama reduced its grocery tax from 4% to 3% in September 2024. Local taxes may increase the total tax paid in some areas. Revenue funds the Education Trust Fund. Discussions continue about potentially eliminating grocery taxes if the fund grows sufficiently.

Mississippi charges the full 7% tax on groceries, the highest rate nationwide with no exemptions. A bill aims to reduce this by 0.2% annually, reaching 2.5% by 2036. However, concerns remain about funding state needs.

Variations in Grocery Tax Rates and Exemptions

States use different approaches for grocery taxes. Some provide tax credits or exemptions to ease burdens for low-income families or seniors, such as Idaho’s tax credit for seniors or Hawaii’s family tax credits.

Local vs. State-Level Grocery Taxes

Local sales taxes can complicate state tax rules. For example, Kansas eliminated its state grocery tax but local counties still impose sales taxes. Utah’s state tax is low but local governments may add their own taxes, causing variation in grocery prices.

Recent Changes and Trends in Grocery Taxation

Several states have lowered or removed grocery sales taxes recently to reduce financial strain on families. South Dakota reduced its rate on unprepared foods, and Missouri has also cut rates. These changes aim to improve food affordability and support nutrition, especially for SNAP recipients.

Economic and Social Impacts of Grocery Taxes

Lowering or removing grocery taxes helps families save money and improves food security and nutrition. However, local governments may lose revenue for schools and services, requiring alternative funding solutions.

Conclusion

Grocery sales tax laws vary widely across the U.S. Many states are revisiting these taxes to ease financial pressure on families. Tracking these changes helps consumers plan spending and informs lawmakers about balancing revenue with fairness.

Frequently Asked Questions

Which states tax groceries in 2024?

The ten states taxing groceries are Alabama, Arkansas, Hawaii, Idaho, Illinois, Mississippi, Missouri, South Dakota, Tennessee, and Utah. Tax rates and rules vary, so check local laws for details.

Are there exemptions for certain food items?

Yes, many states exempt certain foods like fresh fruits, vegetables, baked goods, and dairy. Rules differ by state.

How do grocery taxes impact low-income families?

Grocery taxes increase costs for families with limited income, making it harder to afford food, especially healthy options. Tax credits and SNAP benefits help offset these impacts.

Where can I find updated grocery tax information?

Visit state government websites, local tax offices, or tax policy groups like the Tax Foundation for the latest rates and rules.

Written by Kent Baker Updated June 7, 2025 by Albert Fang