California Sales Tax and Grocery Stores
- Jul 8, 2014 | Gail Cole
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.
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;
- 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.
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;
- 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.