Friday, October 31, 2014 · 5:07 a.m.

State businesses preparing for new food sales tax rates

Effective July 1, Tennessee sales tax for food will be reduced to 5.25 percent

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A bill passed in April that calls for a 0.25 percent reduction in sales tax for food and food ingredients goes into effect July 1. State businesses are urged to begin preparing for this change as soon as possible. (Photo: MGNOnline)

Legislation passed in the House and Senate in late April calls for a reduction in sales tax for food and food ingredients, effective July 1, meaning businesses across the state must now make necessary adjustments to their cash registers and accounting systems.

In the meantime, businesses must continue to collect and remit the existing rate on food and food ingredients sales made through June 30.

Currently, the sales tax rate for food purchased in Tennessee is 5.5 percent, but this will be reduced to 5.25 percent starting in July.

According to estimates, the measure will save a family of four spending $884 in groceries each month an average of $26.52 a year.

House bill 3761 and Senate bill 3763 do not change existing laws that define what is considered food/food ingredients.

Prepared food, dietary supplements, candy, alcoholic beverages and tobacco will continue to be taxed at 7 percent.

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