Are You Ready for the Sales Tax Reduction on Food?
Understanding the Basics of Sales Tax on Food in Kansas
In an effort to reduce the financial burden on its citizens, the state of Kansas has recently enacted legislation to reduce the sales tax on food. However, understanding new tax policies can be overwhelming. Here is a summary of how the Kansas Department of Revenue has interpreted the Food Sales Tax Rate Reduction.
Under the new law, the sales tax on food in Kansas has been reduced from 6.5% to 4%. This decrease is expected to save families in the state an estimated $30 million per year. The reduction applies to all food items, including groceries, snacks and non-alcoholic beverages.
The state says the reduced rate is applicable for food and food ingredients, while prepared foods are charged the standard sales tax rate.
Food & Food Ingredients Defined:
“Food and food ingredients” means substances sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. Specifically included in this designation are bottled water, candy, dietary supplements, food sold through vending machines and soft drinks. “Food and food ingredients” does not include alcoholic beverages or tobacco.
Prepared Foods Defined:
- Sold in a heated state or heated by the seller.
- Two or more food ingredients mixed or combined by the seller for sale as a single item.
- Sold with eating utensils provided by the seller.
Other Exceptions & Guidelines:
- One of the most notable exceptions to the above is baked goods. Baked goods are charged a reduced rate, even if prepared by the seller unless utensils are provided.
- Sandwiches are taxed at the standard rate because the seller uses two or more food ingredients as a single item.
- Retail sales by food manufacturing companies are generally considered eligible for the reduced rate.
For more details, refer to the Food Sales Tax Rate Reduction Publication provided by the KS Department of Revenue (Pub KS-1223). Pages 21-25 contain a helpful product cheat sheet. Check out the 01-2023 Rate Spreadsheet if you have questions about current rates. Be sure to choose the List of All Current Tax Rates tab to get the complete listing.
Contact an Adams Brown advisor if you need further assistance or clarification.