Bill would remove sales tax from most grocery food sales

Retail sales of food and food ingredients would not be taxed. The provision covers retail sales of food and food ingredients, except where subsection (b) provides otherwise. If enacted, this provision would take effect July 1, 2025.

The state would distribute counties and municipalities an amount substantially equal to what they otherwise would have received from taxed food sales. The allocation would cover counties and municipalities affected by the exemption for retail food sales. The amount would be based on reported exempt food sales and other information the commissioner considers relevant. If enacted, this allocation rule would take effect July 1, 2025.

The bill would remove language requiring revenue from one-half percent of the food-tax rate to remain in the state general fund and be earmarked for K-12 education. The provision concerns revenue from one-half percent of the sales-tax rate identified in the food-tax section. If enacted, this provision would take effect July 1, 2025.

Certain alcohol retailers would measure the required 20% food-sales share using total sales rather than taxable sales. The rule applies to licensees covered by the cited alcohol-retailer provisions and concerns food and food ingredients sold for human consumption. The retailer would still need to meet the minimum 20% sales threshold described in the cited provisions. If enacted, these wording changes would take effect July 1, 2025.