States Taxing Food

• As of 2011, Arkansas, which has a 4 percent sales and use tax, charges a 2 percent tax on food. Louisiana and Georgia both charge the full tax rate of 4 percent, while Illinois charges only 1 percent on food, even though its tax rate is 6.25 percent. Missouri charges 1.225 percent for food rather than its regular tax rate of 4.225 percent. North Carolina charges 4 percent for food rather than its sales tax of 5.75 percent. Tennessee charges 5 percent for food rather than its full rate of 7 percent. Utah, with a tax rate of 5.95 percent, charges 1.75 percent for food. Virginia charges 2.5 percent on food, rather than the full tax rate of 5 percent. West Virginia charges 3 percent for food rather than the full 6 percent tax rate.
  
  

Tax Credits

• Some states tax food but permit income tax credits or rebates for low-income households. As of July, 2011, these states are Hawaii, Oklahoma, Idaho, Kansas and South Dakota. Eligible households in these states should contact the state department of revenue or local welfare agencies for information regarding rebates and the administration and application process.
  
  

Food Tax Policy

• Those states taxing food may do so for revenue purposes or for ease of tax administration for businesses. However, states that do not tax food may do so because food taxation is considered inequitable, placing a greater burden on low-income individuals and households, as poorer people must spend a higher proportion of income on basic needs such as food. The latter reasoning may be why most states seek other revenue sources and not focus on tax simplification for sales of supermarket food.
  
  

Food Category Taxation

• Some states proposed taxing certain types of food, such as soda, flavored milks and juices, and snack or "junk" foods, while not taxing basic and healthier food items. In addition to raising tax revenue, such "sin" taxes may aid the state government's fight against obesity, a disease that adds to health care costs. At the time of publication, there are strong lobbying efforts by the grocery and food manufacturing and retailing industries to discourage this type of food taxation.