Is There a Tax on Food in Maryland?
Demystify Maryland's sales tax on food. Learn how the state categorizes food items and transactions for tax purposes.
Maryland imposes a statewide sales and use tax on many goods and services. The current statewide sales tax rate is 6%. While this tax is broad, its application to food items can be intricate, depending heavily on how the food is prepared and sold. Understanding these differences is important for both consumers and businesses.
Understanding Taxable Food Sales
Food items considered “prepared food” or “food for immediate consumption” are generally subject to Maryland’s 6% sales tax. For instance, food sold at restaurants, carry-out establishments, and caterers falls under this taxable classification.
Hot foods, whether consumed on or off the premises, are also typically taxable. This includes items from salad, soup, or dessert bars, as well as party platters and similar arrangements. Sandwiches suitable for immediate consumption are taxed, along with ice cream, frozen yogurt, and other frozen desserts sold in containers less than one pint.
Sales from vending machines are generally subject to sales tax if the food is considered “prepared.” However, certain items like milk, fresh fruit, fresh vegetables, or yogurt sold through vending machines may be exempt. Snack foods are also generally taxable unless sold under specific conditions, such as through vending machines or by a substantial grocery business for off-premises consumption.
Understanding Exempt Food Sales
Many food items are exempt from Maryland sales tax, particularly those considered “food for home consumption” or “groceries.” These typically include unprepared food items sold for consumption off the premises by a substantial grocery or market business. A business qualifies as “substantial” if at least 10% of its total food sales are grocery or market food items, excluding food normally consumed on the premises.
Examples of exempt grocery staples include fresh produce, meats, dairy products like milk and cheese, eggs, bread, cereals, and canned or frozen foods. Non-carbonated bottled water is also generally exempt. However, some items commonly found in grocery stores, such as candy, soft drinks, and alcoholic beverages, are taxable even when purchased there.
Specific exemptions also apply to purchases made with federal food assistance programs. Food items bought with Supplemental Nutrition Assistance Program (SNAP) benefits are exempt from sales tax. This exemption applies to eligible food items, including some that might otherwise be taxable, but does not cover alcoholic beverages, tobacco, or hot foods for immediate consumption. Similarly, purchases made with WIC (Special Supplemental Nutrition Program for Women, Infants, and Children) vouchers are also exempt.
Specific Scenarios and Applications
When ordering food through third-party delivery services, the prepared food items themselves are subject to the 6% sales tax, consistent with in-person dining or carry-out. Whether delivery fees are also taxed often depends on how the service is structured and whether the fee is considered part of the food sale.
Non-food items sold alongside prepared food, such as disposable plates, cups, napkins, or cutlery, are also typically subject to sales tax. These items are generally considered part of the taxable prepared food transaction when provided with the meal. This applies even if they are listed separately on a receipt, as they are integral to the consumption of the prepared food.
Sales of food by schools, excluding post-secondary institutions, are generally exempt, even if sold by a concessionaire, as long as the event is school-sponsored or education-related. Non-profit organizations selling food may also have exemptions, particularly for religious organizations or volunteer fire and veterans’ organizations selling food for on-premises consumption. Non-profit vendors providing no facilities for food consumption may also be exempt from collecting sales tax on food sales.
Alcoholic beverages are subject to Maryland’s sales tax at the 6% rate, regardless of where they are purchased or consumed. This applies whether they are bought at a grocery store, restaurant, or bar. The taxability of alcoholic beverages is distinct from the general food tax rules. Maryland’s use tax may apply to food items purchased out-of-state for consumption within Maryland if sales tax was not collected at the point of purchase. The use tax rate is also 6%, aligning with the sales tax.