The cost of non-prepared food items is about to go down, starting next month. You may recall that in May of this year, Gov. Bill Haslam signed into law a reduction in the state sales and use tax rate on the sales of food and food ingredients. Effective July 1, 2013, the state sales and use tax rate on sales of food and food ingredients will be reduced from 5.25% to 5%.

With the change, food and food ingredients will be subject to a reduced state sales and use tax rate of 5% plus the applicable local sales and use tax rate. Prepared food, dietary supplements, candy, alcoholic beverages and tobacco continue to be subject to the general state sales and use tax rate of 7% plus the applicable local sales and use tax rate. Existing laws defining which items are considered food and food ingredients remain unchanged by the new legislation.

Businesses selling food items subject to the reduced rate of sales and use tax are advised to begin making the necessary changes to allow for the new rate beginning July 1, 2013. Changes to cash registers and accounting systems should be completed by the July 1, 2013 effective date. Businesses must continue to collect and remit the existing 5.25% tax on sales of food and food ingredients made through June 30, 2013 to the Department of Revenue.

Source:

State of Tennessee: See the Information HERE