Wyoming considers sales tax rate increase and tax on food sales

With Wyoming facing a projected a $1.5 billion revenue shortfall over the next two years because of the coronavirus pandemic, Governor Mark Gordon has instructed state agencies to reduce spending and prepare for deeper cuts. But as budget cuts won’t solve the crisis, the state may need to consider tax increases.

According to House Bill 169, raising the state sales and use tax rate from 4% to 5% could generate between $138 and $142 million for the state annually, and approximately $63 million for localities. But the measure wasn’t created to fill the hole dug by the coronavirus (COVID-19). It was introduced by State Representative Patrick Sweeney and others back in February, about a month before Wyoming had its first case of COVID-19.

HB 169 failed, but Sweeney is back on the stump for his tax hike now. He says the state can’t manage its budget crisis without increasing taxes.

Repealing the sales tax exception for food for home consumption is another option. The idea was introduced by lawmakers in 2019 — part of a bill to broaden the sales tax to services (it failed) — and again this year in an amendment to Senate File 057. As in 2019, the proposal failed to garner the necessary support.

Wyoming eliminated the sales tax on groceries in 2006 and made the exception permanent in 2007. Those were better times when the state was feeling flush. Now that the state has a severe deficit, lawmakers could revisit this proposal. However, imposing a tax tends to be less politically palatable than repealing one.

No new sales tax changes will happen until the Wyoming Legislature returns to session in 2021, unless the governor calls another special session. Yet Wyoming’s 5% state tax will apply to short-term lodging in the state starting January 1, 2021.

Learn more about sales tax in the Equality State in our Wyoming sales tax guide.