Tax-Free Groceries in Tennessee
Tax-Free Groceries in Tennessee
Tennessee’s Grocery Tax Holiday: Saving Money and Reducing Burdens for Families
Families in Tennessee are in for a treat as they can now buy tax-free groceries, thanks to a provision in the Tennessee Works Tax Act. This three-month grocery tax holiday, running through October 2023, is expected to save families an average of $100, according to information provided on the Tennessee Department of Revenue (DOR) website.
“In Tennessee, we cut taxes any chance we get because families should keep more of their own hard-earned dollars,” said Governor Bill Lee when announcing the tax holiday. It’s a positive move that allows families to have some breathing room when it comes to their grocery bills.
Exploring the World of Tax-Free Groceries in Tennessee
The grocery tax holiday exempts certain “food and food ingredients” from Tennessee’s state and local sales taxes. The Tennessee DOR defines food and food ingredients as “liquid, concentrated, solid, frozen, dried, or dehydrated substances that are sold to be ingested or chewed by humans and are consumed for their taste or nutritional value.”
But how much families actually save depends on the type of groceries they purchase. After all, not all food is tax-free during the grocery tax holiday, and there are some exceptions to the rules. It’s important to understand what qualifies as tax-exempt and what doesn’t.
Tax-Free vs. Taxable Groceries
During the tax holiday, groceries that would normally be subject to the reduced 4% Tennessee grocery tax rate qualify as completely tax-exempt. However, it’s easy to get confused about which items are taxed at a higher rate and which ones are tax-exempt. To shed some light on this, let’s explore a few examples:
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- Tax-Free Items: Soft drinks, coffee (unless prepared by the seller), ice cream and sherbet, bottled water, unsweetened chocolate, fruit, poultry, dairy products, eggs, bread, peanut butter, flour, baking powder, and meat tenderizers.
- Taxable Items: Candy, prepared food, dietary supplements, pet foods, alcoholic beverages, any food sold with eating utensils, party trays containing multiple food items, warm food, herbal supplements, cake decorations (excluding frosting), sweetened dried fruit, honey-roasted nuts, yogurt-covered raisins, and candy bars (unless they include flour).
For more examples of tax-free food items through October, families can visit the DOR website.
The Burden of Grocery Tax in Tennessee
Tennessee is one of only 13 states that still tax groceries. Although the reduced grocery tax rate stands at 4%, families are still subject to local grocery taxes, which can reach as high as 2.75%, according to the Tax Foundation. While Tennessee generally ranks as a low-tax state for “middle-class” families, this remains a significant financial burden for many, especially when grocery prices are already high.
However, it’s important to note that the grocery tax holiday offers only temporary relief. While it provides some much-needed respite for families, it does not address the underlying issue of grocery taxes in the long term.
In the grand scheme of things, Tennessee’s grocery tax holiday is a positive step toward easing the financial burden on families. It allows them to save money on their grocery bills and keep more of their hard-earned income. The tax holiday serves as a reminder of the importance of assessing and revising tax policies to ensure they align with the needs and priorities of the people they serve.
Ultimately, creating a tax system that supports and uplifts families is a continuous effort. Until then, families in Tennessee can enjoy this tax-free period and take advantage of the savings it offers.
