Twenty-nine states and the District of Columbia exempt most food purchased for consumption at home from the state sales tax. New Mexico is the state that most recently eliminated its sales tax on food.
Five states tax groceries at lower rates than other goods; they are Illinois, Missouri, Tennessee, Virginia, and West Virginia. A sixth state, Utah, will reduce its sales tax on groceries effective January 1, 2007.
Six states — Hawaii, Idaho, Kansas, Oklahoma, South Dakota, and Wyoming — tax groceries fully but offer credits or rebates offsetting some of the taxes paid on food by some portions of the population. These credits or rebates usually are set at a flat amount per family member. The amounts and eligibility rules vary, but may be too narrow and/or insufficient to give eligible households full relief from sales taxes paid on food purchases.
Five states continue to apply their sales tax fully to food purchased for home consumption without providing any offsetting relief for low- and moderate-income families. They are Alabama, Arkansas, Mississippi, South Carolina, and (until January 1, 2007) Utah....
For more details on food tax exemptions and credits, see Nicholas Johnson and Iris J. Lav, Should States Tax Food? Examining the Policy Issues and Options (.pdf), Center on Budget and Policy Priorities, May 1998.
Friday, March 17, 2006
Which states tax groceries?
From the Center on Budget and Policy Priorities yesterday:
Posted 8:49 AM