Does Tennessee Tax Food? State and Local Grocery Taxes

Tennessee imposes a statewide sales and use tax on the purchase of most tangible personal property and a variety of services. The total tax amount a consumer pays is a combination of the state rate and any applicable local taxes. This system means that the final price of goods can vary depending on the location of the purchase within the state. While many items are subject to the full tax rate, the state has specific rules and rates for certain categories of goods, like food.

Tennessee’s State Sales Tax on Food

Tennessee applies a specific, reduced state sales tax rate to the retail sale of “food and food ingredients.” The state-level tax on these items is 4%. This is a reduction compared to the general state sales tax rate, which stands at 7% for most other goods and services. This 4% rate applies only at the state level and exclusively to items that meet the state’s definition of food. Any items purchased at a grocery store that do not meet this specific definition are subject to the higher 7% state tax rate.

Defining Food for Tax Purposes

The reduced 4% tax rate applies only to items that meet the state’s official definition of “food and food ingredients.” This category includes substances sold for ingestion or chewing by humans that are consumed for their taste or nutritional value. The definition covers most staple grocery items that one would purchase to prepare meals at home.

What Qualifies

Items that qualify for the lower 4% state tax rate are the foundational components of most household grocery lists. This includes products like bread, milk, eggs, and cheese. It also extends to fresh produce such as fruits and vegetables, as well as raw meat, poultry, and fish. Pantry staples like flour, sugar, cooking oil, and spices are also considered food and food ingredients.

What is Excluded

Several categories of items are explicitly excluded from the definition of “food and food ingredients” and are therefore taxed at the general 7% state rate. A primary exclusion is prepared food, which includes any food sold in a heated state or food sold with eating utensils provided by the seller. This means hot deli items, fountain drinks, and sandwiches prepared by the store do not qualify for the lower rate.

Other exclusions are candy, dietary supplements, and alcoholic beverages. Dietary supplements sold with a “Supplement Facts” box are also taxed at the higher rate. Alcoholic beverages and tobacco are subject to the 7% general state sales tax, in addition to any applicable excise taxes.

The Role of Local Sales Taxes

The 4% state tax on food is not the final amount consumers pay, as local governments in Tennessee also levy their own sales taxes on top of the state rate. Local jurisdictions, including counties and some cities, set their own rates, which can range up to a maximum of 2.75%. The total tax on qualifying food items is the sum of the 4% state rate and the applicable local rate. For example, in a county with a 2.50% local tax rate, the total sales tax on food would be 6.50%.

Tax Exemptions for Food Purchases

Certain food purchases can be entirely exempt from both state and local sales tax. This full exemption is available to participants in the Supplemental Nutrition Assistance Program (SNAP). When a shopper uses their Electronic Benefit Transfer (EBT) card to pay for qualifying food items, no sales tax is charged on the transaction.

This exemption applies only to items that meet the definition of “food and food ingredients.” Purchases of non-qualifying items, such as prepared hot foods, dietary supplements, or cleaning supplies, remain subject to the full state and local sales tax rates. The SNAP EBT system is designed to automatically differentiate between eligible and ineligible items at the point of sale.