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California Sales Tax and Grocery Stores

  • Jul 8, 2014 | Gail Cole

 Typically tax-exempt in California.

The California State Board of Equalization has published detailed information on how California sales and use tax applies to grocery stores. It’s a must read for owners, managers and other operators of grocery stores in California.

Grocery store, defined

A grocery store is defined for sales and use tax purposes as “an establishment having as its principal line of business the sale of food products and related items.” Country stores and general stores are not considered grocery stores in California, nor are delicatessens. However, separate grocery departments located within department stores are considered as grocery stores.

Grocery stores sell a lot more than food these days, and the taxability of what’s sold is not always immediately apparent. The BOE publication is over 30 pages in length and contains far too many details to be fully parsed here. However, tidy lists of taxable and nontaxable groceries are provided.

Taxable sales

California sales tax usually applies to the following:

  • Alcoholic beverages;
  • Books and publications, including newspapers and periodicals;
  • Cameras and film;
  • Carbonated and effervescent water;
  • Carbonated soft drinks and mixes;
  • Clothing and cosmetics;
  • Dietary supplements;
  • Drug sundries, toys, hardware and household goods;
  • Fixtures and equipment used in an activity requiring the holding of a seller’s permit, if sold at retail;
  • Food sold for consumption on the premises;
  • Hot prepared food products;
  • Ice;
  • Medicated gum, including Nicorette and Aspergum;
  • Nursery stock;
  • Over-the-counter medicines, including aspirin, cough syrup and throat lozenges;
  • Pet food and supplies;
  • Soaps or detergents;
  • Sporting goods; and
  • Tobacco products.

Nontaxable sales

Sales of food for human consumption are generally tax-free in California. In addition, California sales tax does not usually apply to sales of the following items:

  • Baby formulas;
  • Cooking wine;
  • Edge Bars, Energy Bars, and Power Bars;
  • Food products, including baby food, artificial sweeteners, candy and gum, ice cream and ice cream novelties, popsicles, fruit and vegetable juices, olives and jarred onions and maraschino cherries, and beverage and cocktail mixes that are neither alcoholic nor carbonated;
  • Granola bars;
  • Martinelli’s Sparkling Cider;
  • Noncarbonated sports drinks such as Gatorade;
  • Pediatyte;
  • Phone cards; and
  • Drinking water (noncarbonated, noneffervescent)

Additional information about how sales tax applies to sales made in California grocery stores is available at the BOE.

How does your business handle sales tax?

photo credit: Fire Monkey Fish via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.