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Info about the Food and Beverage sales tax category, including meals tax

What do I need to know about the food and beverage sales tax category?

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Best answer 05-06-2019

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Re: Info about food and beverages sales tax category, including meals tax

 

sales-tax-categories-quickbooks-online_meals.png


The majority of US states impose special rules on food. Most states exempt food for home consumption from sales tax entirely.

 

Mapping to the correct food tax category in QuickBooks Online will ensure that the proper taxability decision and rates are applied across all jurisdictions.

 

The following states have special reduced rates for food for home consumption:

  • Arkansas
  • Illinois
  • Missouri
  • Tennessee
  • Utah

The following states exempt food at the state level, but tax it at the general rate at the local level (some exemptions/reduced rates apply):

  • Virginia
  • Arizona
  • Louisiana

While individual states are ultimately responsible for defining the exact scope of special sales tax rules related to food and beverages, food for home consumption is generally accepted to include groceries and foods which are not prepared prior to purchase and are not consumed on-premises.

 

Many states, including member states of the Streamlined Sales Tax Agreement, exclude prepared food, dietary supplements, and alcoholic beverages from the definition of eligible food for home consumption. Candy and soft drinks are only included in many states’ definitions of food for home consumption.

 

  • Example: A liter of soda is fully taxable in Minnesota and Illinois, while fully exempt in Massachusetts.
  • Example 2: A loaf of bread is exempt in Minnesota, taxable at a reduced rate in Illinois, and exempt in Massachusetts.

 

Meals Tax

 

While most states provide an exemption for food for home consumption, food intended to be consumed on site in places such as in a sit-down restaurant or when ordering take-out, is generally taxable. Some states tax this type of food at the general rate, while others have a special rate, called meals tax.

 

Many local jurisdictions also impose a meals tax, even in places that have no other local taxes, such as Massachusetts or in states with no state sales tax, such as New Hampshire.

 

We are in the process of expanding the capabilities of QuickBooks Online to cover all of the meals tax rates in the US. For meals tax rates not yet covered, edit the rate on the transaction to include meals tax.

3 Comments
Highlighted
Moderator

Re: Info about food and beverages sales tax category, including meals tax

 

sales-tax-categories-quickbooks-online_meals.png


The majority of US states impose special rules on food. Most states exempt food for home consumption from sales tax entirely.

 

Mapping to the correct food tax category in QuickBooks Online will ensure that the proper taxability decision and rates are applied across all jurisdictions.

 

The following states have special reduced rates for food for home consumption:

  • Arkansas
  • Illinois
  • Missouri
  • Tennessee
  • Utah

The following states exempt food at the state level, but tax it at the general rate at the local level (some exemptions/reduced rates apply):

  • Virginia
  • Arizona
  • Louisiana

While individual states are ultimately responsible for defining the exact scope of special sales tax rules related to food and beverages, food for home consumption is generally accepted to include groceries and foods which are not prepared prior to purchase and are not consumed on-premises.

 

Many states, including member states of the Streamlined Sales Tax Agreement, exclude prepared food, dietary supplements, and alcoholic beverages from the definition of eligible food for home consumption. Candy and soft drinks are only included in many states’ definitions of food for home consumption.

 

  • Example: A liter of soda is fully taxable in Minnesota and Illinois, while fully exempt in Massachusetts.
  • Example 2: A loaf of bread is exempt in Minnesota, taxable at a reduced rate in Illinois, and exempt in Massachusetts.

 

Meals Tax

 

While most states provide an exemption for food for home consumption, food intended to be consumed on site in places such as in a sit-down restaurant or when ordering take-out, is generally taxable. Some states tax this type of food at the general rate, while others have a special rate, called meals tax.

 

Many local jurisdictions also impose a meals tax, even in places that have no other local taxes, such as Massachusetts or in states with no state sales tax, such as New Hampshire.

 

We are in the process of expanding the capabilities of QuickBooks Online to cover all of the meals tax rates in the US. For meals tax rates not yet covered, edit the rate on the transaction to include meals tax.

Active Member

Re: Info about food and beverages sales tax category, including meals tax

So how is this difference for food and say non-food set up in QB online?

QuickBooks Team

Re: Info about food and beverages sales tax category, including meals tax

It's nice to see you here in the Community, KB57.

I'd like to help guide you more about sales tax category for food in QuickBooks Online.

 

While most items and transactions are taxed, some aren't. Most food is exempt from sales tax. The exemption for food includes:

 

  • food products.
  • dietary foods.
  • health supplements; and
  • certain beverages.

However, these products will depend on how you set up your Products and Services in QuickBooks Online if it's taxable or not.

 

To know more about setting up a product in QuickBooks, the following articles are good references:

 

For more details about sales tax, here are some recommended articles:

 

For account discussion, feel free to reach out to our QuickBooks Online Support. Here's how to contact us:

 

  1. Sign in to your QuickBooks Online Company.
  2. Click (?) Help at the upper right corner.
  3. Select Contact US on the pop-up.
  4. Enter a brief description of your concern then hit Continue.
  5. Click Get a callback.
  6. Enter your contact information.
  7. Select Call me.

If you require more information about sales tax for food and beverages, don't hesitate to fill me in. Have a nice day.