California's food tax laws often leave consumers bewildered and wondering why they pay different prices for the same meal. To see California's confusing food sales tax in action, just stop at a cafe with dine-in and to-go menu options. Eat on the premises and you'll pay one price for a meal, but order the same meal to go and you or may not pay more, based on whether the food is served hot or cold.
Determining Food Sales Tax
Food purchased in a California grocery store is never taxable, but sales tax might be assessed on a restaurant meal depending on the items ordered and where they are consumed. The California Board of Equalization (BOE) is the governing body responsible for enforcing and administering sales taxes on food. The BOE's Regulation 1603 states that in general, tax applies to sales of restaurant meals or hot prepared food products. The exceptions to Regulation 1603 are hot baked goods and beverages such as coffee, whether or not these items are consumed on the premises. When a restaurant clerk asks if you want an item to go or to stay, hot or cold, the clerk is attempting to determine whether sales tax should be applied to the order.
Avoid Sales Tax with Cold Meals
Cold food items consumed off-premises are usually not taxable, with the exception of iced sodas and alcoholic beverages. To save money on take-out food, opt for unheated items such as cold sandwiches, which are nontaxable in most situations. The exceptions are cold menu items purchased at locations where admission fees are charged and the items will be consumed on-premises, such as concerts and amusement parks. However, cold foods purchased at a national park, monument or campground are not taxed.
Offbeat Taxable Food Items
California's BOE doesn't impose a sales tax on most foods meant for human consumption, and consumers can also forgo sales tax on food-production items such as garden fertilizer, fruit trees and other agricultural products used in growing food for humans. For example, sales tax is not charged on vegetable seed, plant foods and nutrients for vegetable gardens, live animals including cattle, poultry and fish as well as pharmaceutical medicines and supplements used to maintain the health of animals that will be consumed by humans, such as antibiotics and steroids.
Proposed Food Sales Taxes
Since 2010, state legislators and anti-obesity advocates in California have attempted to impose an additional sales tax on carbonated beverages such as soda. Known as the “anti-obesity” or “junk food” tax, this measure would impose a tax of 1 cent per fluid ounce on any beverage with added caloric sweeteners and raise nearly $2 billion for children's health programs in the state. Although AB-669 was put into suspense during the 2011 legislative year, advocates expect to keep the public interested in this concept by reintroducing it in future legislative sessions and advocating for the tax in other U.S. states.
- SF Gate: Sales Tax Rules Can be Confusing; Kathleen Pender; Jan. 27, 2009
- Fooducate; Soda Tax Saga: Will California Pave the Way to Legislation?; February 22, 2010
- State of California Board of Equalization: Sales and Use Tax Regulations (PDF)
- State of California Board of Equalization: Agricultural Industry; Publication 66; August 10, 2010 (PDF)
Rene Agredano is a traveling journalist and entrepreneur based in Fort Collins, Colo. Since 1998, she has covered travel, home-and-garden, fitness, animal care and other lifestyle topics for publications such as "The Times-Standard" newspaper of northern California. Agredano holds a Bachelor of Arts in English from Chapman University.