Sales Tax Fundamentals
Get up to speed on the basics of sales tax
Is food taxable in Utah?
byMay 6, 2020
Every US state makes their own rules and laws around the taxability of certain products. Many states, Utah included, treat “necessities” like groceries a little differently than other items when it comes to how much sales tax a business should charge.
This post will explain grocery, meal and beverage taxability in Utah.
Are groceries taxable in Utah?
As of this writing, groceries are taxed statewide in Utah at a reduced rate of 3%.
Or, to break it down further, grocery items are taxable in Utah, but taxed at a reduced state sales tax rate of 1.75%. These transactions are also subject to local option and county option sales tax and that results in a total combined rate on grocery food of 3% throughout the state of Utah.
Grocery items are considered food that is not for immediate consumption. Utah provides very detailed guidance on what is and what is not considered a grocery item here.
Are meals taxable in Utah?
Prepared food in Utah is considered taxable. Utah specifies that prepared food is considered ready to eat or sold with utensils. The state provides a guidance page with plenty of examples on what is and what is not considered prepared food in Utah.
For example, a bagel sold without utensils is considered a grocery item and taxed at the reduced 3% rate. But a bagel sold with utensils is considered prepared food and is taxed at the full rate.
Utah Tourism Tax
Counties in Utah are also allowed to impose a 1% additional “tourism tax” on restaurants. Other establishments that sell food for immediate consumption, such as convenience stores or movie theaters are not liable for collecting the additional 1% tourism tax. Fortunately, Utah Publication 55 helps food sellers determine if they are required to charge the tourism tax.
Are beverages taxable in Utah?
Utah considers many beverages grocery items. For example, bottled water (even flavored) and soft drinks from a cooler are considered groceries and taxed at the reduced 3% rate.
However, soft drinks sold as part of a prepared combo meal or ready-to-drink from a soda fountain are considered prepared food and are taxed at the full rate.
Find out more about drink taxability in Utah here.
How to Always Collect the Correct Amount of Sales Tax in Utah
Do you sell groceries or prepared food? Are you required to collect sales tax in Utah? Do you live in a Utah county with the tourism tax? 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 collect the right amount of sales tax on that bagel – whether or not you are selling it with utensils!
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 in Utah, 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:
- 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?
- Utah 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.