Running a restaurant is complicated enough without trying to decode 50 different state tax codes.
And yet, here you are—because one wrong tax rate on your POS system can mean thousands in penalties, interest, and audit headaches.
Whether you’re a single-location operator wondering about your state’s prepared food rules or a multi-unit concept expanding across state lines, understanding how restaurant sales tax works in each state is super important for compliance and strategic planning.
Remember: tax codes change constantly. Always verify current rates with your state’s department of revenue before making compliance decisions.
Alabama
State Sales Tax Rate: 4% (general); 2% on qualifying groceries (as of September 1, 2025)
Alabama operates a split-rate system that treats restaurant food differently from groceries. The state’s general sales tax rate is 4%, which applies to all prepared food and restaurant meals. However, qualifying grocery items for home consumption are taxed at just 2% following the September 2025 reduction under Act 2025-305.
Hot prepared foods, hot or cold sandwiches, and any food served for immediate consumption do not qualify for the reduced grocery rate. Your dine-in meals, takeout orders, and catering services are all taxed at the full 4% state rate plus applicable local taxes.
Local taxes in Alabama add significant complexity. Cities and counties can levy their own sales taxes, pushing combined rates as high as 11% in some jurisdictions. Mobile and Montgomery, for example, have combined rates around 10%. Restaurant operators must track both state and local rates carefully, as local governments have independent authority to set their own food taxation policies.
Alaska
State Sales Tax Rate: 0% (no state sales tax)
Alaska is one of five states with no statewide sales tax, but that doesn’t mean restaurant operators are off the hook. Individual municipalities and boroughs have broad authority to levy their own local sales taxes, creating a patchwork of rates across the state.
The two largest cities—Anchorage and Fairbanks—do not charge local sales tax, which is great news for operators in those markets. However, Juneau charges 5%, and other municipalities can go as high as 7.5%. The Alaska Remote Seller Sales Tax Commission coordinates collection for remote sellers, but local compliance remains the responsibility of each business.
Because there’s no statewide framework, regulations and exemptions vary wildly across jurisdictions. Some municipalities may exempt certain food categories while others tax everything. Restaurant operators with locations in multiple Alaska communities must research each municipality’s specific ordinances and register separately with each taxing jurisdiction.
Arizona
State Transaction Privilege Tax (TPT) Rate: 5.6%
Arizona doesn’t technically have a “sales tax”—it uses a Transaction Privilege Tax (TPT) that taxes the privilege of doing business in the state. For practical purposes, it works similarly to sales tax and is typically passed on to customers. The base state rate is 5.6%, but local jurisdictions add their own rates, pushing combined totals as high as 11.2% in some areas.
All prepared food is fully taxable. According to the Arizona Department of Revenue, prepared food includes hot prepared food, hot or cold sandwiches, food served by an attendant, food served with utensils, beverages in cups or open containers, and all food sold by caterers or at entertainment venues.
The distinction between taxable prepared food and exempt groceries can get granular. A customer buying a cold bottle of water from your cooler to take home? Potentially exempt. That same water served in a cup with ice? Taxable. Hot coffee? Taxable regardless of whether it’s dine-in or to-go.
Local variations are significant. Some Arizona cities have restaurant-specific tax rates that exceed their general retail rates. Phoenix, Scottsdale, and Tucson all add substantial local TPT on top of the state rate. The Arizona Hospitality Research and Resource Center publishes updated restaurant and bar tax rate charts that operators should reference.
Arkansas
State Sales Tax Rate: 6.5% (general); 0.125% on groceries (eliminated January 1, 2026)
Arkansas has historically been one of the states that taxes groceries, but recent legislation is changing that picture. As of 2025, food and food ingredients are taxed at a reduced state rate of just 0.125%, and effective January 1, 2026, that state grocery tax will be eliminated entirely.
Prepared food does not qualify for the reduced grocery rate. All restaurant meals, hot prepared food, and food sold for immediate consumption are taxed at the full 6.5% state rate plus local taxes.
Local taxes add another layer of complexity. Arkansas allows cities and counties to levy additional sales taxes, and many municipalities also impose specific Hotel/Motel/Restaurant (HMR) taxes or Advertising & Promotion (A&P) taxes that apply specifically to prepared food. Fayetteville charges a 2% HMR tax on prepared food plus a 5% supplemental beverage tax on alcohol. Bentonville has a 1% tax on prepared foods. Little Rock, Fort Smith, and other cities have their own local structures.
Combined rates in Arkansas can reach 12% or higher in some jurisdictions. Restaurant operators expanding into Arkansas need to research not just state and county rates but also city-specific hospitality taxes.
California
State Sales Tax Rate: 7.25% (base rate including mandatory local)
California has one of the highest base sales tax rates in the country at 7.25%, which includes a 6% state rate plus a mandatory 1.25% local rate. District taxes can push combined rates over 10% in many areas—Los Angeles sits at 9.5%, San Francisco at 8.625%, and some jurisdictions exceed 10.75%.
The state provides a Tax Guide for Restaurant Owners through the California Department of Tax and Fee Administration (CDTFA). The key principle: food sold for immediate consumption is taxable, while most grocery items for home preparation are exempt.
What counts as taxable prepared food in California? According to CDTFA Regulation 1603: food sold in a heated state, food sold with eating utensils provided by the seller, and two or more food items sold as a single item (combo meals). Hot coffee, tea, and cocoa are always taxable. Cold sandwiches sold individually for takeout may be exempt, but package them as a combo with chips and a drink, and the whole thing becomes taxable.
California’s 80/80 rule catches many restaurant operators off guard. If more than 80% of your gross receipts are from food sales, and more than 80% of your food sales are taxable prepared food, then all your sales—including normally exempt items—become taxable unless you separately track exempt sales. Most full-service restaurants trigger this rule.
Colorado
State Sales Tax Rate: 2.9%
Colorado’s 2.9% state sales tax rate sounds low, but don’t let that fool you. Local jurisdictions add their own taxes, and the state’s complex home-rule city system means rates and rules can vary dramatically from one city to the next. Combined rates often reach 8-10% in major metro areas.
Cities like Denver, Colorado Springs, Aurora, and Fort Collins administer their own sales taxes independently of the state.. Denver, for example, charges a special 4% rate on food and drink sold by restaurants (compared to 4.31% on general retail), but those rates are separate from state taxes.
For multi-location operators, this means researching each city’s specific tax code, registering separately with home-rule cities, and potentially maintaining different POS configurations for different locations.
Connecticut
State Sales Tax Rate: 6.35% (general); 7.35% on meals
Connecticut stands out for having a specific “meals tax” that adds an extra 1% surcharge on prepared foods. While the general state sales tax rate is 6.35%, all restaurant meals and prepared foods are taxed at 7.35%—and Connecticut does not allow local sales taxes, so this rate is uniform statewide.
Connecticut’s rules can get surprisingly specific. Sandwiches and grinders prepared at a deli counter? Taxable at 7.35%. Hot coffee and tea? Taxable. Donuts, muffins, and bagels in quantities of five or fewer? Taxable as meals. But buy six or more of those same items, and they’re considered groceries taxed at the standard 6.35%. Soup in containers of 8 ounces or less is a meal; larger containers may qualify as grocery items.
Delaware
State Sales Tax Rate: 0% (no sales tax)
Delaware is one of five states with no sales tax—period. No state sales tax, no local sales tax. Restaurant operators do not collect any sales tax from customers on food, beverages, or any other purchases.
This makes Delaware extremely attractive for consumers and simplifies compliance for restaurant operators. Your menu prices are your final prices. No POS tax calculations, no sales tax returns, no risk of under- or over-collection.
However, Delaware does impose a Gross Receipts Tax on businesses, which functions differently from sales tax. This tax is levied on the seller’s total receipts (not passed to customers) and ranges from about 0.1% to 0.75% depending on the business type. Restaurants fall under this system, but it’s a business expense, not a customer-facing tax.
For restaurant operators, the Delaware Division of Revenue provides guidance on gross receipts tax obligations. While you won’t be collecting sales tax, you’ll still need to track revenue for gross receipts purposes.
Florida
State Sales Tax Rate: 6%
Florida’s 6% state sales tax rate applies to most restaurant food and prepared meals, with counties adding discretionary surtaxes of 0.5% to 2.5% on top. Combined rates typically range from 6% to 8.5% depending on the county.
Most grocery items for home consumption are exempt from Florida sales tax, but the Florida Department of Revenue draws clear lines for restaurant operators: food products sold for immediate consumption are taxable. This includes all dine-in and takeout meals, food sold at restaurants, lunch counters, cafeterias, food trucks, and any food sold with eating utensils or for on-premises consumption.
The bakery rules illustrate Florida’s nuances. If your bakery has eating facilities (tables, chairs, a counter where people consume food), all food sold there is taxable—even items purchased to take home. Bakeries without eating facilities can sell exempt products. Similarly, if you sell five or fewer donuts or pastries, Florida presumes these are for immediate consumption and taxes them. Sell six or more, and they may qualify as exempt groceries.
Catering in Florida gets complicated. All prepared food is taxable, plus setup charges, delivery fees, equipment rentals, and mandatory service charges tied to catering events. If your catering invoice includes $500 for food, $100 for delivery, and $200 for table rental, you must collect sales tax on the entire $800.
Georgia
State Sales Tax Rate: 4%
Georgia has a distinctive two-tier system for food taxation. The 4% state sales tax does not apply to most grocery items for home consumption, but prepared food is subject to both state and local taxes. Local jurisdictions add 3-4% on average, bringing combined rates typically to 7-8%.
What makes Georgia tricky is that even “exempt” groceries are still subject to local sales taxes in many counties—they’re just exempt from the state portion. So a customer buying raw ingredients at your grocery section pays only local tax, while someone ordering a prepared meal pays state plus local.
The Georgia Department of Revenue defines prepared food as: food sold in a heated state, food where two or more ingredients are combined by the seller, and food sold with eating utensils provided by the seller. All restaurant meals—dine-in, takeout, delivery—fall squarely in the taxable category.
Beverages follow grocery rules if sold in original sealed containers. A bottled Coke from your cooler? Subject only to local tax. Pour that same Coke into a cup with ice? Now it’s prepared food, taxable at state plus local rates.
Georgia also allows some municipalities to impose additional food and beverage taxes specifically on restaurant sales. These local restaurant taxes can add 1-3% beyond standard sales tax rates. Restaurant operators need to verify whether their specific city or county has additional hospitality taxes.
Hawaii
State Tax Rate: 4% General Excise Tax (GET) Local Taxes: County surcharges up to 0.5% Combined Range: 4% to 4.5%
Hawaii doesn’t have a traditional sales tax—instead, it operates under a General Excise Tax (GET) system that works differently from sales taxes in other states. The GET is technically a tax on the business for the privilege of doing business in Hawaii, though most restaurants pass this cost on to customers.
The statewide GET rate is 4%, but all four counties now impose an additional 0.5% surcharge: Honolulu, Kauai, Hawaii County, and Maui (as of January 2024). This brings the effective rate to 4.5% in most locations through December 31, 2030.
Because the GET is a tax on gross receipts (including the tax itself), businesses are permitted to charge customers up to 4.712% to recover the full tax burden—a concept called “tax on tax.” The GET applies broadly to virtually all food sales, including groceries, prepared food, and beverages. There’s no reduced rate for unprepared food like you’ll find in most mainland states.
For multi-location operators, you’ll need to track county-specific rates and ensure your POS system is configured correctly for each location. The Hawaii Department of Taxation administers the GET statewide.
Official Resource: Hawaii Department of Taxation – GET Information
Idaho
State Tax Rate: 6% Local Taxes: Resort cities only (up to 3%) Combined Range: 6% to 9%
Idaho keeps things relatively straightforward with a flat 6% state sales tax rate and no general local sales taxes. However, resort cities like Sun Valley, McCall, and others can impose additional local option taxes of up to 2-3%, specifically on lodging, alcohol by the drink, and restaurant food.
Restaurant meals are fully taxable in Idaho. The state taxes both prepared food and groceries at the same 6% rate—one of only a handful of states that doesn’t exempt or reduce rates on unprepared grocery items.
The taxability rules are clear: all food, meals, and drinks sold by restaurants are subject to the 6% state sales tax. This includes cover charges, service charges (other than voluntary tips), and charges for preparing or serving food. Voluntary tips separately stated on receipts are not taxable.
Official Resource: Idaho State Tax Commission – Food Sales Tax
Illinois
State Tax Rate: 6.25% (prepared food); 1% (groceries through 2025) Local Taxes: Varies significantly by jurisdiction Combined Range: 6.25% to 11.75%+
Illinois operates one of the more complex sales tax systems for restaurants. The state distinguishes between “food prepared for immediate consumption” (taxed at 6.25%) and “food prepared for consumption off the premises” (previously taxed at 1%, eliminated as of January 1, 2026).
Starting January 1, 2026, Illinois eliminated the state’s 1% grocery tax. However, municipalities and counties can now impose their own 1% local grocery tax by ordinance. Over 600 jurisdictions have already adopted this local tax, so the practical impact for many grocery sellers is unchanged.
For restaurants, all prepared food remains taxable at 6.25% plus applicable local taxes. In Chicago, the combined rate on restaurant meals can reach 11.75% in certain downtown areas due to the city’s 0.5% restaurant tax and the 1% Metropolitan Pier and Exposition Authority (MPEA) food and beverage tax that applies within the MPEA district.
The state’s rules on what constitutes “prepared food” versus groceries can trip up operators. Hot food is always taxable at the high rate. Cold sandwiches made to order are taxable. But pre-made cold sandwiches sitting in a refrigerated case? Those qualify for the lower rate (now potentially local-tax-only). The key is whether you’re providing eating facilities and whether food is prepared specifically for the customer.
Official Resource: Illinois Department of Revenue – Food Sales Tax
Indiana
State Tax Rate: 7% Local Taxes: Food and Beverage Tax in select jurisdictions (1-2%) Combined Range: 7% to 9%
Indiana has a flat 7% statewide sales tax with no general local sales taxes—making it simpler than many neighboring states. However, certain counties and municipalities impose a separate Food and Beverage Tax (FAB) of 1-2% on prepared food sales.
Most grocery items are exempt from Indiana’s 7% sales tax, but prepared food is fully taxable. The state defines prepared food as items sold in a heated state, heated by the seller, consisting of two or more food ingredients combined by the seller, or sold with eating utensils provided by the seller.
Here’s where Indiana gets nuanced: the “75% rule.” If 75% or more of a business’s sales are prepared food, it’s classified as a restaurant and all food items sold with utensils become taxable—even items that would be exempt at a grocery store. For combination businesses (like grocery stores with delis), the utensil test is key: handing a customer utensils makes otherwise exempt food taxable.
The local Food and Beverage Tax applies in approximately 40 counties and municipalities. Marion County (Indianapolis) and Orange County charge 2%, while most others charge 1%. This tax applies to food and beverages sold for consumption at the retailer’s location or prepared on equipment provided by the retailer. Restaurants operating in FAB jurisdictions must register separately to collect and remit this tax through the Indiana Department of Revenue’s INTIME portal.
Official Resource: Indiana Department of Revenue – Food & Beverage Tax
Iowa
State Tax Rate: 6% Local Taxes: Local Option Sales Tax (LOST) up to 1% Combined Range: 6% to 7%
Iowa imposes a 6% state sales tax, with local jurisdictions authorized to add up to 1% through the Local Option Sales Tax (LOST). As of 2025, virtually all 99 Iowa counties have enacted the 1% local option, meaning the effective rate is 7% in approximately 99% of Iowa locations.
Grocery items intended for home consumption are exempt from Iowa sales tax. However, prepared food is fully taxable. Iowa’s definition of prepared food includes food sold in a heated state, food heated by the seller, two or more food ingredients mixed or combined by the seller, or food sold with eating utensils provided by the seller.
The state creates a rebuttable presumption: if food is sold for consumption on the premises of a retailer, it’s presumed to be prepared food and taxable. “Premises” includes buildings, grounds, parking lots, and any facilities under the retailer’s control or made available for consumption.
Mandatory service charges and gratuities are taxable in Iowa—any required charge for meal service (whether labeled as a tip, gratuity, or service charge) gets added to the taxable amount. Voluntary tips paid by customers remain non-taxable. Credit card surcharges tied to food purchases are also taxable because they’re required to obtain the meal service.
Official Resource: Iowa Department of Revenue – Sales Tax on Food
Kansas
State Tax Rate: 6.5% (general); 0% on groceries (as of January 1, 2025) Local Taxes: Up to 4% Combined Range: 6.5% to 11.5% (prepared food)
Kansas made headlines in 2025 by eliminating the state sales tax on groceries entirely—the culmination of a three-year phaseout that began in 2023. For restaurant operators, however, prepared food remains fully taxable at the standard 6.5% state rate plus local taxes.
The distinction between “food and food ingredients” (now 0% state tax) and “prepared food” (6.5% state tax) matters. Prepared food includes items sold in a heated state, heated by the seller, mixed or combined by the seller for sale as a single item (beyond just cutting or repackaging), or sold with eating utensils provided by the seller.
Local sales taxes still apply to both groceries and prepared food. Cities, counties, and special districts can add up to approximately 4% in additional local taxes, making combined rates as high as 10.5% or more in some jurisdictions. This means even with the state grocery exemption, customers still pay local taxes on food purchases.
Official Resource: Kansas Department of Revenue – Food Sales Tax Rate Reduction
Kentucky
State Tax Rate: 6% Local Taxes: Restaurant tax in certain cities (up to 3%) Combined Range: 6% to 9%
Kentucky maintains a straightforward 6% statewide sales tax with no general local sales taxes. The state does, however, allow approximately 50 municipalities to levy a local restaurant tax of up to 3% on food and beverage sales by restaurants.
Food and food ingredients for home consumption are exempt from Kentucky’s 6% sales tax. Prepared food is fully taxable. The state’s definition of prepared food aligns with most states: items sold in a heated state, heated by the seller, mixed or combined by the seller (other than cutting or repackaging), or sold with eating utensils provided by the seller.
Bakery items present a common point of confusion. Bread, rolls, pastries, and similar items are exempt if sold without eating utensils. However, if utensils are provided (forks, plates, napkins for eating on-premises), the items become taxable prepared food.
Kentucky is a Streamlined Sales Tax (SST) member state, which can simplify compliance for multi-state operators. Mandatory service charges are taxable, but voluntary tips are not. For cities with local restaurant taxes (like Louisville and Shepherdsville), restaurants must collect and remit both the 6% state sales tax and the applicable local restaurant tax.
Official Resource: Kentucky Department of Revenue – Sales Tax
Louisiana
State Tax Rate: 5% (as of January 1, 2025) Local Taxes: Parish taxes vary significantly Combined Range: 5% to 13%+
Louisiana’s tax system is among the most complex in the nation, with the state rate recently increasing to 5% (from 4.45%) as of January 1, 2025, and local parish taxes adding anywhere from 0% to over 8% depending on location. Combined rates can exceed 10% in many parishes and reach over 13% in some areas.
Food sold for preparation and consumption in the home is exempt from state sales tax. This includes bakery products, fresh fruits and vegetables, and packaged foods requiring further preparation. Prepared food—meals from restaurants, food trucks, and similar establishments—is fully taxable at both state and local rates.
New Orleans deserves special attention. Orleans Parish imposes a food and beverage tax administered by the New Orleans Exhibition Hall Authority (NOEHA) on food service establishments with gross annual receipts of $200,000 or more. The rate ranges from 0.5% to 0.75% based on sales volume, layered on top of state and local sales taxes. This applies to all prepared foods and beverages sold within Orleans Parish or at the New Orleans International Airport.
Louisiana’s parish-by-parish rate variations create significant compliance challenges for multi-location operators. The state operates a centralized collection system through the Louisiana Sales and Use Tax Commission for Remote Sellers, but local compliance requirements still apply for physical locations.
Official Resource: Louisiana Department of Revenue – Food Tax
Maine
State Tax Rate: 5.5% Local Taxes: None Combined Range: 5.5%
Maine offers simplicity with a flat 5.5% statewide sales tax and no local sales taxes. For restaurant operators, this uniformity means the same rate applies whether you’re in Portland, Bangor, or rural Maine.
Grocery staples are exempt from Maine’s sales tax, but prepared food is fully taxable at 5.5%. The state defines prepared food as food sold in a heated state, food heated by the seller, or two or more food ingredients mixed or combined by the seller for sale as a single item. Food sold with eating utensils provided by the seller is also taxable.
The state requires meals tax collection on all charges for prepared food, including mandatory service charges. Voluntary tips are excluded from the taxable amount. For operators running restaurants alongside retail food sales (like bakeries selling both prepared and packaged items), proper POS configuration is essential to apply the correct tax treatment.
Official Resource: Maine Revenue Services – Sales Tax
Maryland
State Tax Rate: 6% Local Taxes: None for general sales tax Combined Range: 6%
Maryland maintains a uniform 6% statewide sales tax with no additional local sales taxes, making compliance straightforward for restaurant operators across the state.
Food for consumption off-premises is generally exempt from Maryland sales tax. However, prepared food—meals, drinks, and other food items sold by restaurants, caterers, or similar establishments for immediate consumption—is fully taxable at 6%.
The line between taxable prepared food and exempt groceries depends on how and where the food is sold. A supermarket selling pre-made sandwiches in a cold case for takeout may be selling exempt food, while a restaurant selling the same sandwich is making a taxable sale. The key factors include whether the establishment provides eating facilities and whether the food is prepared specifically for the customer.
Maryland also imposes a 9% alcoholic beverages tax on sales of alcohol by the drink, separate from the 6% sales tax. For restaurants serving alcohol, this means tracking and reporting both the standard sales tax on food and the alcoholic beverages tax.
Official Resource: Maryland Comptroller – Sales Tax
Massachusetts
State Tax Rate: 6.25% Local Taxes: Local meals excise up to 0.75% Combined Range: 6.25% to 7%
Massachusetts imposes a 6.25% statewide sales tax on prepared food, with municipalities authorized to add a local meals excise of up to 0.75%. Most major cities, including Boston, have adopted the full 0.75% local meals excise, bringing the combined rate to 7%.
Grocery items for home consumption are exempt from Massachusetts sales tax. Prepared food—all food and beverages sold by restaurants, whether consumed on-premises or taken to go—is taxable. The state’s definition of prepared food is broad: any food sold in a heated state, heated by the seller, consisting of two or more food ingredients combined by the seller, or sold with eating utensils.
Massachusetts has specific rules for bakeries and similar establishments. Bakery items sold without utensils for off-premises consumption may be exempt. However, if you provide seating and the customer eats on-premises, the sale becomes taxable. For combination businesses, maintaining clear records of exempt versus taxable sales is crucial.
The local meals excise applies specifically to restaurant meals and must be collected and remitted separately from the state sales tax. Check with your local municipality to confirm whether they’ve adopted the local meals excise.
Official Resource: Massachusetts Department of Revenue – Meals Tax
Michigan
State Tax Rate: 6% Local Taxes: None Combined Range: 6%
Michigan keeps restaurant tax compliance simple with a flat 6% statewide sales tax and no local sales taxes. The same rate applies across all 83 counties.
Food for home consumption is exempt from Michigan’s 6% sales tax. Prepared food sold by restaurants is fully taxable. Michigan defines prepared food as food sold in a heated state or heated by the seller, food where two or more food ingredients are combined by the seller for sale as a single item, or food sold with eating utensils provided by the seller.
The state provides clear guidance on distinguishing prepared from unprepared food. A deli selling pre-made sandwiches to go? Taxable. A grocery store selling bread, meat, and cheese separately? Exempt. The determining factors are whether the seller combined ingredients and whether utensils are provided.
Michigan’s Use Tax requires businesses to self-report and pay tax on purchases where sales tax wasn’t collected—relevant for equipment purchases from out-of-state vendors or items withdrawn from inventory for business use.
Official Resource: Michigan Department of Treasury – Sales Tax
Minnesota
State Tax Rate: 6.875% Local Taxes: Up to 2%+ in some jurisdictions Combined Range: 6.875% to 9%+
Minnesota has one of the higher state sales tax rates at 6.875%, with local taxes adding up to 2% or more in some areas. Minneapolis, for example, has a combined rate exceeding 8% due to local taxes including stadium-related levies.
Food for off-premises consumption is generally exempt from Minnesota sales tax. Prepared food sold by restaurants is taxable at the full rate. Minnesota’s definition includes food sold in a heated state, food heated by the seller, food consisting of two or more food ingredients combined by the seller, and food sold with eating utensils.
The Minneapolis meals tax deserves special attention for operators in the Twin Cities. The combined rate on restaurant meals in downtown Minneapolis can reach approximately 10.025% when all state, county, city, and special district taxes are combined—one of the highest rates in the Upper Midwest.
Minnesota also imposes a separate tax on alcoholic beverages, which restaurants must track separately from food and non-alcoholic beverage sales. For multi-location operators, the variation in local rates between Minneapolis, St. Paul, and suburban locations requires careful POS configuration.
Official Resource: Minnesota Department of Revenue – Sales Tax
Mississippi
State Tax Rate: 7% (general); 5% (grocery items as of July 1, 2025) Local Taxes: Tourism taxes in some areas Combined Range: 5% to 7%+
Mississippi recently reduced its tax on grocery items. As of July 1, 2025, grocery items are taxed at a reduced rate of 5%, while prepared food and restaurant meals remain taxable at the full 7% state rate.
Restaurant operators should note the distinction: food sold for immediate consumption (prepared food) is taxed at 7%, while food sold for home preparation can qualify for the reduced 5% rate. This matters for combination businesses like convenience stores with food service or grocery stores with deli counters.
Mississippi doesn’t have general local sales taxes, but some tourism-heavy areas may impose additional taxes on hospitality businesses. The state rate applies uniformly across all 82 counties for standard retail transactions.
The state’s definition of prepared food follows typical patterns: food sold in a heated state, heated by the seller, or consisting of two or more food ingredients combined by the seller for sale as a single item. Food sold with eating utensils provided by the seller is also considered prepared food.
Official Resource: Mississippi Department of Revenue – Sales Tax
Missouri
State Tax Rate: 4.225% (general); 1.225% (groceries) Local Taxes: Up to 5.875% Combined Range: 5.45% to 11.988%
Missouri offers a reduced state tax rate on groceries at just 1.225%, compared to 4.225% on prepared food and general merchandise. However, local taxes can add significantly to the total—combined rates in Kansas City and St. Louis can exceed 10%.
Food for home consumption qualifies for the reduced 1.225% state rate, but local sales taxes still apply at the full rate. Prepared food from restaurants is taxed at the full 4.225% state rate plus all applicable local taxes.
Missouri’s local tax landscape is particularly complex. Cities, counties, and special districts can all impose their own sales taxes, and rates vary significantly within metropolitan areas. In the Kansas City area, combined rates range from about 7% to over 11% depending on the specific location. St. Louis City has different rates than St. Louis County municipalities.
For restaurant operators, this complexity means careful attention to location-specific rates. Multi-location operators may face six or more different combined rates across their portfolio. The Missouri Department of Revenue provides rate lookup tools, and many POS systems integrate directly with state databases to ensure accurate collection.
Official Resource: Missouri Department of Revenue – Sales Tax
Montana
State Tax Rate: 0% (no statewide sales tax) Local Taxes: Resort tax up to 3% in designated areas Combined Range: 0% to 3%
Montana is one of only five states without a general sales tax, which might sound like paradise for restaurant operators. But before you start celebrating, there’s a catch. Certain resort communities can impose a local resort tax of up to 3% on lodging, restaurant meals, and bars.
The resort tax applies in designated tourist areas including Big Sky, West Yellowstone, Whitefish, Red Lodge, Virginia City, Seeley Lake, and St. Regis. If you’re operating a restaurant in any of these communities, you’ll collect the local resort tax on prepared food and beverages. Outside these designated areas, restaurant meals are completely tax-free.
Montana does have other taxes that affect hospitality businesses, including an 8% combined lodging tax and specific excise taxes on alcohol. But for pure restaurant operations outside resort areas, the absence of sales tax creates a uniquely simple compliance environment compared to virtually every other state.
Official Resource: Montana Department of Revenue
Nebraska
State Tax Rate: 5.5% Local Taxes: Up to 2% Combined Range: 5.5% to 7.5%
Nebraska imposes a 5.5% state sales tax on prepared food, with local taxes adding up to 2% in cities like Omaha, bringing combined rates as high as 7.5%. The state maintains clear distinctions between taxable prepared food and exempt grocery items.
Prepared food in Nebraska includes any food sold in a heated state, heated by the seller, combined or mixed by the seller into a single item, or sold with eating utensils provided by the seller. Restaurant meals, deli items, hot bar selections, and catering services all fall squarely into the taxable category. However, bakery items sold without utensils—like donuts, whole cakes, and loaves of bread—remain exempt unless sold heated.
Nebraska’s 75% rule adds complexity for mixed retailers: if more than 75% of your food sales are prepared food, then all food items you sell become taxable. There’s an exception for items containing four or more servings packaged as a single item—a dozen donuts stays exempt even from a primarily prepared food retailer.
Official Resource: Nebraska Department of Revenue – Sales Tax
Nevada
State Tax Rate: 6.85% Local Taxes: Up to 1.525% Combined Range: 6.85% to 8.375%
Nevada keeps restaurant taxation relatively straightforward with a 6.85% state sales tax, plus local county taxes that push combined rates up to 8.375% in Clark County (Las Vegas). All prepared food intended for immediate consumption is fully taxable.
The state defines prepared food as items sold in a heated state, heated by the seller, consisting of two or more ingredients combined by the seller, or sold with eating utensils. Restaurant meals, hot beverages (including coffee, tea, and their substitutes), and any drink served with a straw, cup, or glass are all taxable at the combined rate.
Grocery items for home consumption remain exempt from Nevada sales tax, but candy and soda are treated as groceries and stay tax-free when purchased at retail. This creates an interesting split: that same soda served in a cup at your restaurant is taxable, but sold in a sealed bottle for off-premises consumption, it’s exempt.
Official Resource: Nevada Department of Taxation – Sales Tax
New Hampshire
State Tax Rate: 0% (no general sales tax) Meals & Rentals Tax: 8.5% Combined Range: 8.5% on prepared food
New Hampshire doesn’t have a general sales tax, but restaurant operators shouldn’t get too excited. The state imposes an 8.5% Meals and Rentals Tax on all prepared food, making restaurant meals among the most heavily taxed items in an otherwise tax-free state.
The 8.5% tax applies to all meals whether consumed on-premises, taken out, or delivered. This includes restaurants, cafes, caterers, food trucks, and even prepared food sections of grocery stores like deli sandwiches and hot foods. Grocery items sold for home preparation remain completely tax-free.
The M&R Tax is collected by operators and remitted monthly to the New Hampshire Department of Revenue Administration. Every business providing taxable meals must obtain an M&R license before commencing operations. The state takes compliance seriously—operators are required to maintain records for three years and face penalties for late filing or payment.
Official Resource: New Hampshire Department of Revenue Administration – Meals & Rooms Tax
New Jersey
State Tax Rate: 6.625% Local Taxes: None Combined Range: 6.625%
New Jersey offers restaurant operators a refreshingly simple compliance environment: one statewide rate of 6.625% with no local sales taxes. The Garden State applies this rate uniformly to all prepared food sold by restaurants, taverns, and caterers.
All receipts from prepared food sales are taxable, including cover charges, minimum charges, entertainment charges, and catering fees. Delivery charges are also taxable when included as part of the total bill. Grocery items for home consumption remain exempt, but candy, soft drinks, and bottled water are taxable.
New Jersey provides an exemption for gratuities and tips distributed to employees—these are not considered part of the taxable sales price when separately stated on the bill. Coupons and discounts reduce the taxable amount, but only when the restaurant isn’t reimbursed by a third party. If a manufacturer or distributor reimburses you for a coupon, the full pre-discount price becomes taxable.
Urban Enterprise Zones offer one exception to the uniform rate: businesses in certain designated zones can collect a reduced 3.3125% rate (50% of the standard rate). Salem County falls entirely within an Enterprise Zone, offering potential advantages for operators in that market.
Official Resource: New Jersey Division of Taxation – Sales Tax
New Mexico
State Tax Rate: 5.125% (Gross Receipts Tax) Local Taxes: Up to 4% Combined Range: 5.125% to 9.0625%
New Mexico doesn’t technically have a “sales tax”—it uses a Gross Receipts Tax (GRT) that functions similarly but with important distinctions. The state GRT rate is 5.125%, with local additions pushing combined rates as high as 9.0625% in some jurisdictions.
Unlike traditional sales taxes levied on the buyer, GRT is technically imposed on the business for the privilege of doing business in New Mexico. However, most businesses pass this cost to customers, making it function like a sales tax in practice. The GRT applies to most services as well as goods, making it broader than typical state sales taxes.
Restaurant meals and prepared food are fully subject to GRT at combined rates. However, New Mexico provides a deduction for qualifying grocery food sold by certified retail food stores—meaning grocery items that would be eligible for SNAP benefits can be sold without GRT. This deduction doesn’t apply to prepared food, which remains fully taxable regardless of where it’s sold.
The complexity comes from New Mexico’s local rate structure. GRT rates change at municipal and county boundaries, and rates can vary significantly even within metropolitan areas. Albuquerque’s combined rate runs around 7.875%, while other areas may be higher or lower. Restaurant operators need location-specific rate verification for accurate collection.
Official Resource: New Mexico Taxation and Revenue Department
New York
State Tax Rate: 4% Local Taxes: Up to 4.875% Combined Range: 4% to 8.875%
New York’s sales tax structure combines a 4% state rate with local county and city taxes, plus an additional Metropolitan Commuter Transportation District (MCTD) tax in the NYC metro area. The result: combined rates that reach 8.875% in New York City and vary significantly across the state’s 62 counties.
All prepared food in New York is taxable. This includes restaurant meals (dine-in, takeout, and delivery), sandwiches (hot or cold), food sold in a heated state, and any food prepared by the seller and ready to eat. The taxability doesn’t depend on where the food is consumed—if it’s prepared, it’s taxable.
Grocery items sold in the same form as commonly found in retail food stores remain exempt. However, the line blurs quickly at establishments that sell both. A deli sandwich is always taxable; packaged chips purchased with it may be exempt if sold in standard retail packaging. Self-service salad bars and hot buffets are taxable. Coffee sold hot is taxable, but plain coffee beans for home brewing are exempt.
For operators in New York City, the combined 8.875% rate (4% state + 4.5% city + 0.375% MCTD) applies to all prepared food sales. Outside the city, rates vary by county—some upstate counties have combined rates as low as 7%, while others approach NYC levels.
Official Resource: New York State Department of Taxation and Finance
North Carolina
State Tax Rate: 4.75% Local Taxes: 2% to 2.75% Meals Tax: 1% (certain jurisdictions) Combined Range: 6.75% to 8.5%
North Carolina taxes prepared food at the combined state and local rate—4.75% state plus 2% to 2.75% local, depending on the county. But several jurisdictions add an extra layer: a 1% prepared meals tax that applies specifically to restaurant food, pushing rates as high as 8.5% in places like Wake County (Raleigh).
The prepared meals tax currently applies in Wake, Dare, Cumberland, and Mecklenburg Counties, plus the Town of Hillsborough. This tax is collected in addition to regular sales tax and must be reported separately. It applies to all prepared food and beverages sold for consumption on or off premises by retailers subject to state sales tax.
The state defines prepared food as items sold heated, heated by the retailer, or sold with eating utensils. Bakery items sold without utensils by artisan bakeries get an exception—they’re treated as qualifying food subject to the reduced 2% rate rather than full prepared food rates.
Official Resource: North Carolina Department of Revenue – Sales Tax
North Dakota
State Tax Rate: 5% Local Taxes: Up to 3.5% Combined Range: 5% to 8.5%
North Dakota maintains a 5% state sales tax on prepared food, with cities and counties authorized to add local taxes that can push combined rates up to 8.5% in some jurisdictions. The state also permits local lodging and restaurant taxes of 1% in communities that have adopted them.
All prepared food is taxable in North Dakota, whether consumed on-premises or taken to go. This includes meals, lunches, snacks, candy, chewing gum, coffee, tea, soft drinks, ice cream, and alcoholic beverages sold by restaurants, cafes, or caterers. The defining characteristics of prepared food are items sold heated, combined by the seller, or provided with eating utensils.
North Dakota is a full member of the Streamlined Sales Tax system, which simplifies compliance for multi-state operators. The state uses destination-based sourcing, meaning tax is calculated based on where the customer receives the product, not where the seller is located.
Official Resource: North Dakota Office of State Tax Commissioner
Ohio
State Tax Rate: 5.75% Local Taxes: Up to 2.25% Combined Range: 5.75% to 8%
Ohio presents one of the more unique approaches to restaurant taxation: the taxability of prepared food depends entirely on where it’s consumed. Food eaten on the premises where it’s sold is fully taxable at combined rates up to 8% (5.75% state plus up to 2.25% local). But identical food sold for off-premises consumption is exempt.
This “eat-in vs. take-out” distinction creates a practical challenge for restaurant operators. The Ohio Department of Taxation advises asking customers whether their order is “for here” or “to go” to determine taxability. Drive-through orders consumed off-premises are exempt, while the same order eaten in your dining room is taxable.
There’s an important exception: soft drinks are always taxable regardless of where they’re consumed. Ohio specifically excludes soft drinks from its definition of “food,” so that fountain drink or bottled soda in your customer’s to-go order still gets taxed even when the burger and fries don’t.
Ohio’s 88 counties each set their own local rates, and some jurisdictions add transit authority taxes (like COTA in the Columbus area, which pushed Franklin County to 8% as of April 2025). Restaurant operators need to verify rates for each specific location, as rates can vary even within a single metropolitan area.
Official Resource: Ohio Department of Taxation
Oklahoma
State Tax Rate: 4.5% (prepared food); 0% (groceries as of August 2024) Local Taxes: Varies by municipality Combined Range: 4.5% to 11.5%
Oklahoma eliminated its 4.5% state grocery tax in August 2024, but prepared food remains fully taxable at the 4.5% state rate plus local taxes. If your business sells more than 75% prepared food and provides utensils, all food sales are treated as prepared food and taxed at the full rate.
The 75% prepared food sales threshold creates compliance complexity for mixed-use establishments. Convenience stores with delis, grocery stores with hot food bars, and similar hybrid operations must carefully track their sales mix annually to determine their tax treatment. Utensil availability also triggers prepared food classification—providing plates, forks, or even napkins can shift otherwise-exempt items into taxable territory.
Local taxes continue to apply to all food sales including groceries, which can push combined rates above 10% in cities like Oklahoma City (combined 8.625%) and Tulsa. The state prohibited local governments from raising grocery tax rates until July 1, 2025, but that moratorium has since expired.
Official Resource: Oklahoma Tax Commission – Food and Food Ingredients
Oregon
State Tax Rate: 0% (no state sales tax) Local Taxes: Limited; Ashland 5% food and beverage tax Combined Range: 0% to 5%
Oregon is one of five states with no statewide sales tax, making it a compliance dream for restaurant operators—with one notable exception. The city of Ashland imposes a 5% food and beverage tax on all prepared foods and non-alcoholic beverages sold at restaurants, grocery store delis, caterers, and coffee shops.
For operators outside Ashland, Oregon represents the simplest tax environment in the country. No collection, no remittance, no audits related to sales tax. This simplicity extends to takeout, delivery, and catering operations throughout most of the state.
Ashland’s F&B tax applies to dine-in, takeout, and delivery orders equally. Businesses retain 5% of collected taxes to cover accounting expenses, with the remainder funding city infrastructure projects. If you’re operating or expanding into Ashland, factor this unique local obligation into your pricing and systems.
The lack of sales tax has been a consistent feature of Oregon’s tax landscape, with voters repeatedly rejecting statewide sales tax proposals. The state instead relies heavily on income taxes for revenue.
Official Resource: Oregon Department of Revenue
Pennsylvania
State Tax Rate: 6% Local Taxes: Philadelphia 2%; Allegheny County 1% Combined Range: 6% to 8%
Pennsylvania taxes all prepared food and beverages at eating establishments at 6% statewide, with additional local taxes in two major metro areas. Philadelphia adds 2% for a combined 8% rate, while Allegheny County (Pittsburgh area) adds 1% for a combined 7% rate. All other Pennsylvania locations charge only the 6% state rate.
What makes Pennsylvania unusual is its treatment of certain items. Candy and gum are exempt from sales tax—a distinctive quirk given that Pennsylvania is home to the Hershey Company. However, soft drinks, sports drinks, and flavored water are fully taxable. The distinction between taxable and non-taxable items requires careful POS configuration.
An “eating establishment” is broadly defined as any business that holds itself out to the public as selling prepared or ready-to-eat food for immediate consumption, regardless of whether seating is provided. This includes food trucks, caterers, and deli counters within grocery stores.
The Pennsylvania Department of Revenue has implemented specific restaurant industry guidance and support following COVID-19, including resources for understanding taxability, record-keeping requirements, and audit procedures.
Official Resource: Pennsylvania Department of Revenue – Restaurant Industry Guidance
Rhode Island
State Tax Rate: 7% (sales tax) + 1% (meals and beverage tax) = 8% Local Taxes: None statewide; Burlington and Rutland administer separate local taxes Combined Range: 8% to 9%
Rhode Island imposes a combined 8% tax on restaurant meals—7% general sales tax plus a 1% local meals and beverage tax that applies statewide. This structure makes Rhode Island one of the higher-taxed states for restaurant meals, though the uniform statewide rate simplifies compliance.
The 1% meals and beverage tax applies to all prepared food and beverages sold by eating and drinking establishments, whether consumed on or off premises. This includes restaurants, bars, cafeterias, food trucks, caterers, and vending machines in locations that provide seating or utensils.
Mandatory gratuities and service charges are subject to both the 7% sales tax and 1% meals tax. Only voluntary tips left at the customer’s discretion are exempt from taxation. This distinction matters significantly for operations that apply automatic gratuities to large parties.
Official Resource: Rhode Island Division of Taxation – Meals and Beverage Tax
South Carolina
State Tax Rate: 6% (prepared food); 0% (unprepared groceries exempt from state tax) Local Taxes: Up to 3% + hospitality taxes up to 2.5% Combined Range: 6% to 11.5%
South Carolina exempts unprepared groceries from state sales tax, but prepared food faces the full 6% state rate plus significant local add-ons. The state allows counties to impose capital project taxes, education taxes, and transportation taxes, while municipalities can layer on hospitality taxes ranging from 1% to 2.5%.
The Myrtle Beach area demonstrates the stacking effect: restaurants there face 11.5% combined rates when you add the 5% state sales tax, 1% state tax relief, 1% local education tax, 1% RIDE 3 transportation fee, 2.5% city and county hospitality fees, and 1% tourism development fee. Charleston area rates typically land around 9%.
South Carolina defines “prepared meals or food” as anything sold by a business that holds itself out as engaged in selling ready-to-eat food—including hot or cold items, food with utensils, and anything sold from a designated dining area within a larger store.
One unique feature: South Carolina offers a 1% sales tax exemption for customers aged 85 and older, which retailers must honor upon proof of age. This applies to all purchases including restaurant meals.
Official Resource: South Carolina Department of Revenue
South Dakota
State Tax Rate: 4.2% Local Taxes: Municipal sales tax up to 2%; Municipal Gross Receipts Tax (MGRT) on restaurants Combined Range: 4.2% to 8%+
South Dakota is one of only three states that taxes groceries at the full state rate with no reduction, and prepared food receives the same treatment—4.2% state tax plus applicable local taxes. But restaurants face an additional layer: the Municipal Gross Receipts Tax (MGRT), sometimes called the “bed, board, and booze tax.”
The MGRT is an additional tax that municipalities can impose on eating establishments, alcoholic beverages, lodging, and admissions. Combined with municipal sales taxes, restaurant operators in cities like Sioux Falls and Rapid City can face combined rates exceeding 6% on all food and beverage sales.
Food for immediate consumption triggers both state sales tax and applicable MGRT. This includes all restaurant sales (dine-in, takeout, drive-thru), catering operations, concession stands, and food trucks. Convenience stores that heat food or provide utensils must also collect MGRT on those items.
Official Resource: South Dakota Department of Revenue – Sales & Use Tax
Tennessee
State Tax Rate: 7% (prepared food); 4% (grocery staples) Local Taxes: Up to 2.75% Combined Range: 6.75% to 9.75%
Tennessee has one of the highest combined sales tax rates in the nation, with prepared food taxed at 7% state plus up to 2.75% local for a maximum 9.75% combined rate. Grocery staples receive a reduced 4% state rate, but this distinction doesn’t help restaurant operators—all prepared food faces the full rate.
Prepared food in Tennessee includes anything sold in a heated state, containing two or more ingredients mixed by the seller, or provided with eating utensils. This means virtually everything sold at a restaurant qualifies for the higher rate. Candy, dietary supplements, and alcoholic beverages also face the full 7% rate.
The 4% grocery rate applies to food that’s packaged in original form and not prepared by the seller—milk, bread, produce, and similar items. Soft drinks and bottled water also qualify for the reduced rate when sold in unprepared form, but hot coffee faces the full rate.
Official Resource: Tennessee Department of Revenue – Sales and Use Tax
Texas
State Tax Rate: 6.25% Local Taxes: Up to 2% Combined Range: 6.25% to 8.25%
Texas exempts most grocery items from sales tax, but restaurant meals are fully taxable at 6.25% state plus up to 2% local taxes. The maximum combined rate of 8.25% applies in most major metropolitan areas, including Houston, Dallas, San Antonio, and Austin.
Ready-to-eat food is taxable whether consumed dine-in or to-go. The key factors are preparation and utensils—hot food, food with two or more combined ingredients, and food sold with plates, utensils, or napkins triggers full taxation. Bakery items sold without utensils remain exempt, but that same donut becomes taxable if you provide a plate.
Texas provides detailed guidance on mixed retail environments. Grocery stores with deli counters must carefully segregate taxable prepared food sales from exempt grocery sales. Soft drinks, candy, and snack items are taxable regardless of where sold.
Complimentary meals and drinks aren’t directly taxable, but restaurants must accrue use tax on the cost of taxable ingredients (like soft drinks) used in preparing complimentary items. Gift card sales aren’t taxable, but the redemption transaction is.
Official Resource: Texas Comptroller – Restaurants and the Texas Sales Tax
Utah
State Tax Rate: 4.85% + local (combined 6.35%-8.35% for general); 3% (grocery staples) Restaurant Tax: Additional 1% on all restaurant food and beverage sales Combined Range: 4% (groceries) to 9%+ (restaurant meals)
Utah operates a unique multi-tier system for food taxation. Grocery staples are taxed at a flat 3% statewide, but prepared food faces the full combined state and local rate—typically 6.35% to 8.35%—plus an additional 1% restaurant tax imposed by counties.
The restaurant tax applies to all food and beverage sales by establishments primarily engaged in serving prepared foods, including bars and taverns. This 1% adds on top of regular sales tax, pushing restaurant meal taxation into the 7.35% to 9%+ range depending on location.
Restaurants that also sell grocery items may collect the reduced 3% rate on those sales, but only if the grocery items are listed separately on the receipt. However, restaurants must still collect the 1% restaurant tax even on grocery sales, resulting in a 4% rate for grocery items sold at restaurants.
The utensil rule matters in Utah: food sold with plates, forks, spoons, napkins, or straws is classified as prepared food regardless of temperature. A bagel sold without utensils is a 3% grocery item; the same bagel on a plate is prepared food at the full rate.
Official Resource: Utah State Tax Commission – Restaurant Tax
Vermont
State Tax Rate: 6% (sales tax); 9% (meals tax); 10% (alcohol served in restaurants) Local Option Tax: Up to 1% in some municipalities Combined Range: 9% to 10%+ (restaurant meals)
Vermont has a unique tax structure where restaurant meals are subject to a specific 9% meals tax rather than the 6% general sales tax. Alcoholic beverages served for immediate consumption face an even higher 10% rate. These rates apply uniformly statewide, with some municipalities adding a 1% local option tax.
The 9% meals tax applies to all prepared food sold by restaurants, caterers, food trucks, and similar establishments. The definition of “restaurant” is broad: any establishment where 80% or more of food sales are taxable prepared food, or any establishment that charges for food intended for immediate consumption.
Vermont’s “three donut rule” provides relief for certain bakery transactions—single bakery items of the same type sold in quantities of three or more are exempt from meals tax. Whole pies, loaves of bread, and similar items sold for off-premises consumption also remain exempt.
Official Resource: Vermont Department of Taxes – Restaurants
Virginia
Virginia operates one of the more complex state-local restaurant tax systems in the country. The state sales tax rate is 5.3% (4.3% state plus a mandatory 1% local add-on), but prepared food faces an additional layer: localities can impose their own meals tax on top.
Cities can levy up to 6.5% in meals tax, while counties are capped at 4%. This means Virginia restaurant owners can face combined rates ranging from 5.3% to nearly 12% depending on location. In January 2026, Fairfax County implemented a 4% meals tax, bringing the total tax on prepared food and beverages to 10% when combined with the state’s existing sales tax—a move that generated significant pushback from the restaurant industry.
Other notable local meals taxes include: Arlington County at 5% (effective July 2025), Roanoke at 6.5% plus 5.3% state sales tax, and various Northern Virginia jurisdictions with their own structures. Groceries are taxed at a reduced 1% state rate, but prepared food—whether dine-in or takeout—gets the full treatment.
The key distinction: hot food sold for immediate consumption always qualifies as prepared food and is taxable at the higher rate, while cold food may qualify for grocery treatment depending on how it’s sold.
Official resource: Virginia Department of Taxation
Washington
Washington State’s 6.5% state sales tax applies to all prepared food, with local jurisdictions able to add up to an additional 3.6%—creating combined rates that can exceed 10% in cities like Seattle. The state operates on a destination-based system, meaning you charge the rate where your customer receives the product.
Washington’s restaurant tax rules hinge on the “75% test.” If more than 75% of your food sales are prepared food (which is most restaurants), you must collect sales tax on ALL food and beverage sales—including items that would otherwise be exempt, like a carton of milk. The only exception: items sold as four or more servings without utensils remain exempt even for restaurants above the 75% threshold.
The “utensil rule” is critical here: if you physically hand napkins or straws to customers, all food sales become taxable regardless of the 75% test. Simply making utensils available (self-serve) doesn’t trigger this provision.
Official resource: Washington Department of Revenue – Restaurants Guide
West Virginia
West Virginia keeps restaurant taxation relatively straightforward: the state’s 6% sales tax applies to all prepared food. Municipalities can add up to 1% locally, bringing the maximum combined rate to 7%.
For West Virginia restaurants, the definition of “prepared food” follows Streamlined Sales Tax guidelines: food sold in a heated state, food heated by the seller, or two or more food ingredients combined by the seller for sale as a single item (unless sold by weight or volume). Food sold with eating utensils provided by the seller also qualifies as prepared food.
The state uses a destination-based sourcing method, so you collect tax based on where the customer takes possession of the food. Voluntary gratuities are not taxable, but mandatory service charges added to the bill are subject to sales tax.
Official resource: West Virginia Tax Division
Wisconsin
Wisconsin’s 5% state sales tax applies to prepared food, with 68 of the state’s 72 counties adding an additional 0.5% local tax. Milwaukee County is the notable exception with a 0.9% county rate plus a 2% City of Milwaukee tax, creating a combined rate of 7.9% in the city—a significant increase that took effect in 2024.
Additionally, Milwaukee County imposes a separate 0.5% food and beverage tax specifically on prepared food, candy, soft drinks, and on-premise alcohol consumption.
Wisconsin’s prepared food rules follow the Streamlined Sales Tax definitions with the familiar 75% threshold and utensil provisions. If your prepared food sales exceed 75% of total food sales, you collect tax on everything. The twist: Wisconsin distinguishes between making utensils available versus physically handing them to customers. If you hand utensils to the customer, all food sales become taxable.
The state exempts bakery items from the prepared food definition if sold unheated—so a cold doughnut or muffin isn’t taxable, but heat it up and it becomes prepared food. This creates compliance complexity for bakeries and cafes that serve both heated and cold items.
The Wisconsin Department of Revenue’s Publication 236 “Restaurants and Bars” provides extensive guidance with detailed examples of taxable versus non-taxable scenarios.
Official resource: Wisconsin Department of Revenue – Publication 236
Wyoming
Wyoming’s restaurant tax system is relatively business-friendly: the state’s 4% sales tax applies to prepared food, with counties able to add up to 2% through voter-approved measures (the “5th penny” and “6th penny” taxes). Currently, 21 of Wyoming’s 23 counties have the optional 5th penny in place.
The state exempts “food for domestic home consumption” from sales tax—essentially grocery items. But prepared food is fully taxable. The distinction follows familiar patterns: food sold in a heated state, food heated by the seller, or multiple food ingredients combined for sale as a single item.
A cold sandwich from a grocery store deli may be exempt, but the same sandwich served hot with utensils becomes taxable. These distinctions matter for businesses operating convenience stores, grocery delis, or quick-service restaurants.
Wyoming is a destination-based state, so you collect tax based on where the customer receives the food. The state’s low population and relatively simple tax structure make compliance more manageable than in states with extensive local variations.
Official resource: Wyoming Excise Tax Division
District of Columbia
The nation’s capital has one of the highest restaurant tax rates in the country: a flat 10% tax on all prepared food and beverages, whether dine-in, takeout, or catered. This applies uniformly across the District—no local variations to track since D.C. operates as a single jurisdiction.
In addition to the prepared food rate, D.C. imposes:
- 6% general sales tax rate on most tangible goods
- 8% tax on soft drinks (defined as beverages with sweeteners containing less than 100% juice or less than 50% milk/milk substitutes)
- 10.25% on alcohol sold for off-premises consumption
- 14.5% on hotel accommodations
- 18% on commercial parking
Groceries and unprepared foods sold for home consumption are exempt from sales tax. The key distinction is immediate consumption: anything prepared for immediate consumption—including hot food, food served with utensils, or quantities less than one pint (like a single serving of ice cream)—faces the 10% rate.
For restaurants near the D.C. border, understanding the contrast with neighboring Virginia and Maryland jurisdictions matters. A customer crossing from D.C. into Virginia might see meaningfully different tax treatment on the same meal.
D.C. requires all businesses meeting the economic nexus threshold ($100,000 in gross revenue or 200 transactions) to collect and remit sales tax. Returns are filed through the MyTax.DC.gov portal.
Official resource: D.C. Office of Tax and Revenue
Navigate Your Restaurant Tax with Specialized Help
If there’s one takeaway from this guide, it’s this: restaurant tax compliance is anything but simple. Fifty states plus D.C., each with their own definitions of “prepared food,” their own local add-ons, and their own quirky rules about utensils, heated items, and threshold percentages.
This is exactly why specialized accounting support isn’t a luxury for restaurant operators; it’s a necessity. A generalist CPA who handles dentists, law firms, and retail shops won’t catch the nuances of tip credit calculations, prime cost analysis, or multi-state restaurant tax compliance.
You need someone who speaks restaurant.
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