Since March of this year, Deltaplex News has been following the progress of ACT 1008 (HB1685), better known as the Grocery Tax Relief Act. This legislation eliminates state sales and use taxes on food and food ingredients. On January 1st, Arkansas will join Washington, D.C., and 37 other states by not charging sales tax on unprepared food for home use. This will save consumers 12.5 cents on every $100 worth of groceries purchased.
While the savings might sound minimal, the legislature believes it will add up over time and assist working families, individuals on fixed incomes, and people who have found the rising food prices most challenging. With the current state of grocery prices, any assistance is welcome.
However, counties and local municipalities may still tax groceries. In Jefferson County, the tax rate for both prepared and unprepared food is 1.25%, or $1.25 on every $100 worth of groceries. Neither Pine Bluff nor White Hall charge tax on groceries.
It is also important to note that the Grocery Tax Relief Act only applies to food and food ingredients. Other household essentials, such as toilet paper and laundry detergent, will still be taxed by the state at 6.5%, plus any taxes levied by the county or municipality. In Pine Bluff, the city charges 1.63% sales tax and Jefferson County charges 1.25%. This means that the total tax rate for non-food essentials will continue to be 9.38%, or $9.38 on every $100 spent.
There are food items that are exempt from the tax relief bill and will still be taxed. Such items include:
- Candy
- Soft drinks
- Alcoholic beverages
- Dietary supplements
- Tobacco
- Prepared Food
Prepared food is defined as meals and food items prepared by the seller for immediate consumption.
Items that are cut, repackaged, or pasteurized by the seller will not be taxed as they are still considered food or food ingredients. This means that meat cut and packaged by the butcher will not be taxed, nor will eggs, fish, poultry, or foods that contain these items and require cooking by the consumer before being eaten.
In the end, only time will tell if the Grocery Tax Relief Act significantly impacts the average family. My hope is that it does provide assistance to our community and leads to other actions by our government representatives to assist our neighbors.
