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Grocery Taxes: Here Are 5 States Considering Shelving It

Grocery Tax
LOS ANGELES, CALIFORNIA - MARCH 19: Seniors shop for groceries during special hours open to seniors and the disabled only at Northgate Gonzalez Market, a Hispanic specialty supermarket, on March 19, 2020 in Los Angeles, California. Northgate Gonzalez Market is opening all of its Southern California locations one hour early, from 7:00-8:00 a.m., exclusively for senior citizens and disabled customers, amidst panic buying in some stores during the COVID-19 pandemic. (Photo by Mario Tama/Getty Images)

Although the cost of food has increased, these states want to make grocery tax more affordable. 

Consumer Price Data from December 2022 shows that throughout 2022, the food-at-home price index increased by 11.8%. Cereals and baked products saw a stunning 16.1% increase, while meat, poultry, fish, and eggs had a 7.7% increase. Dairy goods had a high 15.3% percentage. But the reality remains: groceries are growing more costly, regardless of what you stock up on.

Many customers are expecting relief in the form of lower grocery taxes, a kind of sales tax that is specifically applied to groceries, in light of this sobering economic reality. Indeed, if you reside in one of the American states that still levies a food tax, you are aware of the fact that these taxes can significantly increase your shopping expenses. Fortunately, four additional states offer grocery credits, and five recently decreased their food tax rates. 

Grocery Tax

LIVERMORE, CA – JULY 18: A Safeway customer browses in the fruit and vegetable section at Safeway’s new “Lifestyle” store July 18, 2007 in Livermore, California. Safeway unveiled its newest Lifestyle store that features numerous organic and natural foods as well as expanded produce, meat, seafood and floral departments. The store also offers freshly made desserts and baked goods, a coffee roaster, a fresh nut bar and wine section with over 2,000 wines, some of which are stored in a climate controlled wine cellar. (Photo by Justin Sullivan/Getty Images)

5 States Cut Grocery Taxes

STL Today said at least five of the 13 states that imposed a tax on food beginning of last January 1 — Kansas, Virginia, Illinois, Tennessee, and Idaho – approved laws to lessen, do away with, or at least soften the blow. In numerous other states, attempts were unsuccessful.

Gov. Laura Kelly of Kansas vetoed a bill this spring that will gradually eliminate the 6.5% tax after she rejected a bill to lower the state grocery tax in 2019. Kelly, a Democrat, now wants to abolish the state grocery tax entirely by April 1 as well as the taxes on baby diapers and feminine hygiene items. 

Eliminating the state grocery tax in Virginia is expected to cost $399 million in the first full fiscal year of implementation, which begins on July 1. In fiscal 2028, the expense is anticipated to rise to $415 million. 

The new law in Virginia eliminates the 1.5% state tax on grocery and several necessities, including diapers and feminine hygiene products. 

The principal supporter of the bill, Democratic state senator from Virginia Jennifer Boysko, said that it will benefit people who have the most difficulty affording food and other necessities.

Tennessee raised the tax for one month in August 2017 after lowering it from 5% to 4% in 2017. Idaho increased the state tax credit for grocery purchases, and Illinois suspended its grocery tax for a year on July 1 of last year. 

ALSO READ: Californians Can Receive Up To $1,050 Tax Rebates Through Debit Cards But Expires On 2026

How Helpful Are Grocery Tax Cuts

In a CPA Practice Review report, most people agree that lowering or eliminating the grocery tax will make the tax system more equitable and enable low-income families to buy the food they require to lead healthier lives. 

Andy Harig, a vice president of FMI told Washington Post (via Taste of Home) interview that grocery taxes are essentially poor public policy because they disproportionately affect lower-income people.

This is so because, in comparison to middle- or high-income households, lower-income families spend a bigger portion of their income on food. 

The Center for Budget and Policy Priorities noted that families in the lowest income quartile spend 10.3% of their yearly income on food, compared to 5.7% for families in the top income quartile. Due to systematic racism that exists today and in the past, one report mentioned that a disproportionate number of persons living in low-income homes are people of color.

This is important to bear in mind whether you reside in one of the 45 U.S. states that levies a sales tax when casting your ballot in November or contacting your local officials.

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