Over the last few months, legislators in Alabama, Kansas, Missouri, Oklahoma, Utah, and Virginia have proposed either lowering or eliminating their state’s sales tax on food items. While 45 states levy some form of sales tax, most states have an exemption for groceries. However, 13 states have no exemption at all, and 7 states allow groceries to be taxed at the same rate as other consumer goods.
This is a problem because taxes on groceries are inherently regressive, taxing not only the wealthy, but also those who are the most vulnerable such as the elderly and Americans on fixed incomes. Americans with large families and those who rely on home cooked meals each week are also at a particular disadvantage because they must buy larger qualities of food.
On average, Americans already spend $4,942 annually on food at the grocery store. With an inflation rate that has now reached 7.5% over the last 12 months, families are spending even more on basic food items.
States would be wise to consider changing their antiquated sales tax laws and lower the burden on consumers. Even if a full grocery tax repeal is not possible, states still have a range of options to choose from. They can temporarily freeze taxes on groceries, make groceries taxable at a lower rate, or consider introducing grocery tax credits as Idaho has done. The point is, the time is right for states to revisit their sales tax laws and create meaningful change for their residents.