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Understand Sales Tax for Food & Beverage
Is food taxable in North Carolina?
byAugust 31, 2020
Every state is a little different when it comes to sales tax. This guide will walk you through when – and when not to – charge sales tax when selling food and beverages in North Carolina.
Are groceries taxable in North Carolina?
In North Carolina, grocery items are not subject to the state’s statewide sales tax, but are subject to a uniform 2% local tax. Candy, however, is generally taxed at the full combined sales tax rate.
Example: You own a grocery store in Murphy, NC. A customer buys a toothbrush, a bag of candy and a loaf of bread. According to North Carolina law, you’d be required to charge the full Murphy, NC sales tax amount of 7% (4.75% NC state rate and 2.25% Cherokee County rate) on the toothbrush and the candy. But you’d only charge the uniform reduced rate of 2% local tax on the loaf of bread.
Are meals taxable in North Carolina?
Prepared food is generally taxable in North Carolina. North Carolina considers prepared food to meet these conditions:
- Heated by the retailer or sold in a heated state
- It consists of two or more foods mixed or combined by the retailer for sale as a single item but does not include foods containing raw eggs, fish, meat, or poultry that require cooking by the consumer as recommended by the Food and Drug Administration to prevent food borne illnesses.
- It is sold with eating utensils provided by the retailer.
Goods sold by “artisan bakeries” without eating utensils are considered non-taxable at the state level, though they are subject to the 2% local sales tax just like groceries.
You can find more examples of when prepared food is and is not taxable in Section 32 of the latest North Carolina Sales and Use Tax Bulletin.
Are beverages taxable in North Carolina?
Soft drinks are fully taxable in North Carolina, but the following do not count as soft drinks: powdered fruit drinks, powdered tea with flavoring and sweeteners, frozen fruit drink from concentrate, and beverages that contain milk or milk, products, soy rice or other milk substitutions, or more than 50% vegetable or fruit juice.
How to Always Collect the Correct Amount of Sales Tax in North Carolina
Do you sell groceries, meals or beverages? Are you required to collect sales tax in North Carolina? 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 North Carolina, where they are only taxed at a uniform local 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:
- Sales Tax by State: Are grocery items taxable?
- Sales Tax by State: To-Go Restaurant Orders
- Is the food I sell on my food truck taxable?
- North Carolina Sales Tax Guide for Businesses
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.
Your food taxability checklist
Food and beverage taxability is complicated, and collecting and filing correctly can be difficult. Use this checklist to make sure you’re compliant.Download the checklist