New York sales tax and the takeout menu
More restaurants than ever are offering to-go menus, with some even bringing food out to the customer’s car. With so many drive-thrus and curbside delivery options, it is often easier to pick up food and consume it at home than enjoy it in a restaurant. Big-city dwellers who rely on public transportation sometimes live on to-go meals, since filling a trunk with groceries every week isn’t an option.
New Yorkers have an even greater incentive to get items to go. In some cases, qualifying food is exempt from sales tax when customers take it off-site. Those same items, when consumed in the restaurant, would be taxed at the standard New York state sales tax rate of 4 percent, plus any local taxes. In some areas, state plus local sales tax goes as high as 8.875 percent, so this can bring significant savings to New York’s diners. Here are a few things you need to know about restaurant food in New York.
Heated and Prepared Foods
In most cases, heated food sold by restaurants and stores will be charged sales tax in New York, no matter where it’s consumed. This includes food sold in grocery or convenience stores for consumption on premises. If the food is heated, it is subject to sales tax, even if it is sold elsewhere in the store in cold, packaged condition.
This requirement includes not only food that is heated in a microwave or using a stove or oven, but also food that is kept warm using a heat lamp. If a grocery store has a food bar with heated items, the purchases must be taxed even if the customer packages the food up and takes it home.
In addition to heated food, food that is prepared and handed to the customer, ready to be eaten, is subject to sales tax in New York. This includes items that are hot or cold, as well as those that are intended to be eaten at home. If the food is arranged on a platter or in a carton by the seller and handed to the customer with no additional preparation required, New York businesses are required to charge sales tax.
New York exempts qualifying foods that are given to the customer in packaged condition, as long as they are provided to the customer unheated. To qualify, the food must be sold in the same condition it would be sold in a grocery store and must be taken as a to-go order. If packaged food is consumed on-premises, it is taxable under New York law. However, whether sold in a grocery store or restaurant, some packaged items are taxable, including candy, beer, soft drinks, and bottled water.
As with hot buffets in grocery stores, cold buffets and salad bars are also taxed, both when items are consumed on site and taken to go. Ice cream, when served to be consumed on-premises, is also always subject to sales tax, although it is exempt if purchased in the type of packaging found in a grocery store. If a grocery store or restaurant sets up an ice cream machine or a beverage dispenser, sales of those items are taxed, as well.
In New York, the determining factor in whether to-go foods are taxable or not is packaging. If the item is packaged as it would be in a grocery or convenience store, restaurants can sell it as a takeaway item tax-free. However, if an item is heated or prepared to be consumed on-site, sales tax is required.
The 2021 sales tax changes report: midyear update
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