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Understand Sales Tax for Food & Beverage
Is food taxable in Arizona?
byAugust 7, 2020
Most US states consider grocery items to be fully or partially sales tax exempt, while also considering prepared foods like hot restaurant meals to be taxable. Arizona is no exception. That’s even though they call their version of sales tax “Transaction Privilege Tax (TPT)”. This post will go over when retailers should and should not charge sales tax on food sales in Arizona.
Are groceries taxable in Arizona?
Groceries are generally exempt from Arizona’s TPT. According to the Arizona Department of Revenue, any food that falls within the guidelines of the Food Stamp Act of 1977, or that would have fallen into that bill’s purview should the food item have existed at that time, are TPT exempt.
This includes necessary grocery items like produce, meat and bread, but does not include things like alcohol.
Further, many states make exceptions and tax items like snack food or candy, but Arizona considers candy, gum,bagged or wrapped snack foods and beverages sold in their original containers to be exempt from statewide TPT, too.
While the state considers groceries tax exempt, according to a recent news article, all but about 20 Arizona cities currently tax grocery items. However, the major cities of Phoenix, Mesa and Tucson do not consider groceries taxable.
To sum it up, if you sell groceries in Arizona you are not required to charge the state’s TPT, but you may be required to charge a locality’s sales tax rate. Check out our Arizona TPT Guide for more info on collecting sales tax in Arizona.
Read more about grocery taxability in Arizona Publication 575.
Are meals taxable in Arizona?
Prepared food, including hot meals or deli meals like sandwiches, are generally always taxable in Arizona.
Arizona considers prepared food to be:
- hot or cold sandwiches
- food served by an attendant to be eaten at tables, chairs, benches, etc. or within parking areas for in-car consumption
- food served with trays, glasses, dishes or other tableware
- beverages sold in cups, glasses or open containers
- food sold by caterers
- food sold within the premises of theaters, exhibitions, concerts, places of amusement, and any businesses that charge for admission
For the most part, if you sell prepared meals at a restaurant, pushcart or food truck, those items are taxable. You can learn more about prepared food taxability in Arizona Publication 575.
Are beverages taxable in Arizona?
Arizona also considers coffee, coffee substitute, tea, soft drinks and sodas to be TPT exempt. However, keep in mind that individual jurisdictions might impose a sales tax on these items.
How to Always Collect the Correct Amount of Sales Tax in Arizona
Do you sell groceries, meals or beverages? Are you required to collect sales tax in Arizona? 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 Arizona, they are non-taxable at the state level but taxable at the local level. 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?
- Arizona 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.