Groceries are exempt from sales taxes in most US counties

Foods purchased at grocery stores were exempt from sales taxes in 57% of the counties in the US in 2019, according to new data from USDA’s Economic Research Service. Using county-level tax data in combination with the USDA’s National Household Food Acquisition and Purchase Survey, researchers at USDA recently examined whether grocery taxes are associated with how much money U.S. households spend on food at retail outlets and restaurants. USDA-ERS found that grocery taxes were associated with differences in food spending among lower-income households that were eligible for the Supplemental Nutrition Assistance Program but did not participate in it. Among those households, researchers were able to associate taxes on groceries with reduced food spending at retail stores and increased food spending at restaurants. However, Federal law and USDA regulations stipulate that foods purchased with SNAP benefits are exempt from state and local sales taxes, and no such relationship was found among households participating in SNAP.