Time to Say Goodbye to the Grocery Sales Tax? These States Say Yes

Grocery taxes have become a controversial issue as families in some states are faced with paying taxes on top of already high food prices. In response, a few states have reduced, eliminated, or eased their grocery sales tax.

Thirteen U.S. states have a grocery tax, and the amount of tax varies by state and is usually a percentage of the total purchase price. In some states, the tax rate is the same as the general sales tax rate, while in others, it’s a separate, lower rate specifically for groceries.

There have been calls to eliminate the tax to make the tax code fairer and help families afford food — which would be a nice boost on top of the child tax credit payments. However, there are a lot of questions surrounding the effects of eliminating the grocery tax.

Here’s who’s considering eliminating this tax and what’s swirling around regarding this possible change. And if you’re interested in saving money on groceries (tax or no tax), we’ve got you covered.

There are 13 states with a grocery sales tax.

In The Krazy Coupon Lady’s home state of Idaho, we pay 6% sales tax, and that sales tax extends to all purchases — even groceries. Some states’ grocery tax rates match their sales tax, like Idaho, while others have a lower rate for grocery purchases.

Although most of the U.S. population lives in the 37 states that don’t have a grocery sales tax, here are the 13 that do:

• Alabama: 4% sales tax, 4% grocery tax
• Arkansas: 6.5% sales tax, 0.125% grocery tax
• Hawaii: 4% sales tax, 4% grocery tax
• Idaho: 6% sales tax, 6% grocery tax
• Illinois: 6.25% sales tax, 1% grocery tax
• Kansas: 6.5% sales tax, 6.5% grocery tax
• Mississippi: 7% sales tax, 7% grocery tax
• Missouri: 4.225% sales tax, 1.225% grocery tax
• Oklahoma: 4.5% sales tax, 4.5% grocery tax
• South Dakota: 4.5% sales tax, 4.5% grocery tax
• Tennessee: 7% sales tax, 4% grocery tax
• Utah: 4.85% sales tax, 1.75% grocery tax
• Virginia: 5.3% sales tax, 1% grocery tax (as of Jan. 1, 2023)

Five states have passed laws that reduce this tax burden — and more are considering total repeals.

To address the rising inflation and other economic pressures, five of the 13 states with grocery taxes have reduced the overall grocery tax impact on their citizens. Here’s a brief overview of what each state has done regarding their grocery tax:

• Kansas: Governor Laura Kelly signed a bill in 2021 to phase out the 6.5% grocery tax in stages, with the goal of completely removing the tax by April 1, 2023.
• Virginia: The state passed a new law in 2022 to remove the 1.5% state tax on groceries and certain essential items, such as diapers and feminine hygiene products. The law goes into effect on July 1, 2023.
• Illinois: The state paused its 1% grocery tax for a year, starting on July 1, 2022.
• Tennessee: The state dropped its grocery sales tax from 5% to 4% in 2017 and lifted the tax for a month in August 2021.
• Idaho: The state increased the annual state tax credit for groceries from $100 to $120 for people under 65 and from $120 to $140 for people 65 and older.

As state legislative sessions begin in 2023, governors and legislators in different states are pushing for the repeal of the grocery tax. The governors of Kansas and South Dakota have said the elimination of the grocery tax is high on the priority list for early 2023.

Related: Deals on Tax Day That’ll Get You Free Food & Discounts

There’s a lot of debate over the pros and cons of eliminating this tax.

Reducing or eliminating the grocery sales tax would have a budgetary impact on most families, but beyond that, there’s a lot of debate. For one, some people say it would make the tax code fairer, while others say the loss of tax revenue would put public services like education, health care, and transportation at risk.

And then there’s the question of who’d be helped most by the tax reduction. Some argue that low-income families would benefit the most, as they spend a larger share of their income on food. But others say that the middle class benefits most from the grocery tax exemption because low-income families are already exempt from the grocery tax when they use SNAP food benefits.

There’s also a lot of debate about which foods should be exempt from the grocery tax. And some states are having trouble keeping things consistent. Take New York for instance: cookies are tax-free, but candy isn’t.