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Is food taxable in Tennessee?

by Sarah Craig November 15, 2021

Food and beverage is always a tricky category when it comes to sales tax. Sometimes it’s exempt, sometimes it’s not, and sometimes, like in Tennessee, it’s taxed at a reduced rate. We’ll cover everything you need to know about sales tax on food and beverage items in Tennessee. 

Are groceries taxable in Tennessee?

In Tennessee, grocery items are taxable but at a reduced rate of 4% (plus local rates). The state defines food and food ingredients as “things you can eat that are consumed for taste and nutritional value. These food items must be in packaged or original form, and not prepared by the seller or served as a ready-to-eat meal.” Here are some examples of these items:

  • Baby food 
  • Bread 
  • Canned foods 
  • Cereal 
  • Coffee
  • Condiments
  • eggs 
  • Raw fish, meat, poultry 
  • fruit 
  • Herbs and spices 
  • Ice cream 
  • Lunch meat
  • Uncooked pasta 
  • Trail mix 
  • Vegetables 
  • Yogurt

These common grocery items, while found in a grocery store, are not qualified for the reduced rate:

  • Candy
  • Dietary supplements
  • Sweet and semi sweet baking chips
  • Fruit trays
  • Deli dishes
  • Chewing gum

Are meals taxable in Tennessee?

Prepared meals are fully taxable at the state sales tax rate of 7% (plus local tax). Prepared food in Tennessee is defined as:

  • Food sold in a heated state or heated by the seller,
  • Food that contains two or more food ingredients mixed together by the seller for sale as a single item; or
  • Food sold with eating utensils, such as plates, knives, forks, spoons, glasses, cups, napkins, or straws provided by the vendor.

Are beverages taxable in Tennessee?

Bottled water, soft drinks, and unprepared coffee is taxed at the reduced rate of 4%. Hot coffee and alcoholic beverages are fully taxable at 7%. 

How to always collect the correct amount of sales tax in Tennessee

Do you sell groceries, meals or beverages? Are you required to collect sales tax in Tennessee? Then this may sound like a huge headache. 

That’s where TaxJar can help. 

With the TaxJar API, you can be sure you’re collecting the right amount of sales tax on every transaction. Our product tax codes ensure you do collect sales tax on that soft drink but don’t collect sales tax on that plain coffee drink. 

Not to mention, most eCommerce businesses have nexus in multiple states. For example, groceries are taxable in some states, but non-taxable in others. Or, like Illinois, they are taxable at a reduced rate. With TaxJar, you’ll collect the right amount of sales tax from every customer, in every state, every time.

Further food and meal taxability resources:

Ready to automate sales tax collection, reporting and filing? Click here for more on how TaxJar can take the headache out of sales tax in your food & beverage business.

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