Grocery and Convenience Stores

Bakery Items – Taxable and Nontaxable

Bakery items sold by a business that qualifies as a bakery are not taxable. A bakery is a retail location where more than 50 percent of sales consist of bakery items sold from a display case or counter and consumed off the premises.

Bakery items sold by a business that does not qualify as a bakery are taxable when sold with eating utensils (plates, knives, forks, spoons) or when heated.

Bakery items include

bagels
bread
cakes
cookies
croissants
cupcakes
Danish pastries
doughnuts
kolaches (those with meat are bakery items only when the dough is cooked around the meat)
muffins
pies
scones
strudels
tortillas

Baking Products – Nontaxable

Baking products are not taxable, including

baking chips
baking mixes
cake sprinkles
edible decorations
icing

Beer and Wine – Taxable

Beer and wine are taxable.

Beverages and Water – Taxable and Nontaxable

Soft drinks are taxable and include

carbonated and non-carbonated, non-alcoholic beverages that contain natural or artificial sweeteners
canned, bottled, frozen or powdered drinks and drink mixes
all “-ades” and punches containing less than 50 percent vegetable or fruit juice by volume
flavored water
sports drinks

Energy drinks, sports drinks and naturally or artificially sweetened electrolyte drinks are taxable as soft drinks, except when they

are labeled (or required to be labeled) with a “Supplement Facts” panel by the Food and Drug Administration;
contain milk, milk products, milk substitutes (almond, soy, rice, etc.); or
contain more than 50 percent vegetable or fruit juice by volume.

Nontaxable beverages are

beverages that contain milk; milk products; milk substitutes (almond, soy, rice, etc.); or juice with more than 50 percent vegetable or fruit juice by volume
water, including unflavored water, mineral water; spring water and sparkling water.

Candy and Gum –Taxable

Candy and gum are taxable. These include

bars, drops, taffy and other confections made of natural or artificial sweeteners
nuts and fruits that have been candied, crystalized, glazed or coated with chocolate, yogurt or caramel
nuts roasted with a sweetener

Coffee and Tea – Taxable and Nontaxable

Coffee and tea are taxable when they are

bottled or canned and contain natural or artificial sweeteners; or
sold in a heated state or in a cup or glass or with a straw.

Nontaxable coffee and tea include

bottled or canned coffee and tea (when not sweetened)
coffee beans and ground coffee
coffee/tea pods
instant coffee/tea
tea bags and loose tea

Food Products – Nontaxable

Food products are not taxable. Food products include flour, sugar, bread, milk, eggs, fruits, vegetables and similar groceries.

Nontaxable food products also include food that is

typically reheated before eating; or
only cut up, repackaged or pasteurized such as fruit, vegetable or cheese trays.

If a store has a microwave that the customer uses to reheat food, tax is not due. For example, if the store sells a frozen burrito, and the customer uses the store’s microwave to heat it, tax is not due.

Ice and dry ice – Taxable

Ice and dry ice are taxable.

Prepared food – Taxable

Prepared food is taxable. This includes

hot food*
hot drinks such as cocoa, coffee or tea
cold drinks sold with meals or with eating utensils**
any food sold with eating utensils**
sandwiches (unless sold frozen or partially frozen and require thawing or heating by the customer before eating)
other food or drinks that can be eaten immediately without further preparation by the purchaser and sold by a restaurant lunch counter, deli or other similar location within the grocery or convenience store
food or drinks sold from a vending machine
food created at a store by combining two or more food ingredients sold as one item (salad, salsa, pesto and hummus)

*Hot food is food sold after it is heated by the seller. Examples are pizza, fried or rotisserie chicken, burritos and soup. Hot food also includes frozen or cold food (including sandwiches) that is heated by the seller. For example, if a store employee heats a frozen burrito for the customer, tax is due.

**Eating utensils include trays, plates, knives, forks, spoons, glasses, cups, straws or chopsticks. Napkins, wax paper and foam or plastic clamshells are not eating utensils.

If a store, other than a bakery, gives the customer plates or other eating utensils with bakery items, or heats bakery items, the bakery items are taxable.

Snack Items – Taxable and Nontaxable

Snack items are taxable when sold in an individual-sized portion or from a vending machine. An individual-sized portion contains less than 2.5 ounces or is labeled as having not more than one serving. Snack items that are not individual-sized are not taxable, unless sold as a part of a meal.

Snack items include

breakfast bars, granola bars, nutrition bars, sports bars, protein bars and yogurt bars (unless labeled and marketed as candy)
chips, crackers, hard pretzels, pork rinds and corn nuts
ice cream, sherbet and frozen yogurt
ice pops, juice pops, sorbet and other frozen fruit items containing less than 50 percent fruit juice by volume
nuts (not pine nuts or candy-coated nuts)
popcorn
snack mix and trail mix
sunflower seeds and pumpkin seeds

Snack items are not taxable when sold in prepackaged units containing more than one individual-sized package, such as a box of six prepackaged, individual-sized bags of chips.

Drugs and Supplements

Drugs, Medicines and Dietary Supplements – Nontaxable

Over-the-counter drugs and medicines required by the Food and Drug Administration to be labeled with a Drug Facts panel are not taxable. For more information, see Publication 94-155, Sales Tax Exemptions for Healthcare Items.

Dietary supplements are not taxable. A dietary supplement is a product that is labeled with a “Supplement Facts” panel in accordance with regulations of the FDA. If a product is not labeled with a “Supplement Facts” panel, it is also considered a dietary supplement if it

contains one or more vitamins, minerals, herbs or botanicals, amino acids, or substances that supplement the daily dietary intake;
is not represented as food or the sole item of a meal or the diet; and
is labeled “dietary supplement” or “supplement.”

Products containing cannabidiol (CBD) are not classified as dietary or nutritional supplements. CBD or products containing CBD are not eligible for the dietary and nutritional supplement exemption from sales and use tax. These products should not be labeled as supplements. This exclusion reflects FDA guidance.

Non-Food Items

Books, Comics and Magazines – Taxable

Books, comics and magazines are taxable.

Cigarettes, Cigars and Tobacco Products – Taxable

Sales tax is due on cigarettes, cigars and all other tobacco products. See the Tobacco Taxes and Fees webpage for more information.

Newspapers – Nontaxable

Nontaxable newspapers must

be printed on newsprint;
be distributed periodically every four weeks or less;
be sold for an average price of $3.00 or less per day over a 30-day period; and
provide general interest news and advertisements.

Prepaid Wireless Telecommunications Service Cards – Taxable

Sales of prepaid wireless telecommunications service cards and devices are subject to both sales tax and to the 2 percent 9-1-1 Prepaid Wireless Emergency Service Fee.

Telephone Calling Cards – Taxable

Telephone calling cards are taxable.

Discounts, Coupons, Gift Certificates and Rebates

Discounts

A cash discount is an offer to customers that reduces an item’s price. Tax is due on the final discounted price of a taxable item. For example, a store offers customers a 10 percent discount on all purchases paid with cash. If a customer buys a taxable item priced at $25, the discounted price is $22.50 after the 10 percent discount of $2.50 is deducted. Tax is due on the final discounted price of $22.50.

Coupons

A coupon is a cash discount. The store must subtract the coupon’s value from the taxable item’s sales price and collect tax on the resulting price.

Gift Cards and Gift Certificates

The purchase of a gift card or gift certificate is not subject to tax. Redeeming or purchasing an item with a gift card or gift certificate is treated as a cash transaction. If the item purchased is taxable, sales tax is due on the full sales price including any amount paid with the gift card.

Rebates

There are two main types of rebates: manufacturer rebates and retailer rebates.

A mail-in manufacturer rebate does not lower the price because a third-party manufacturer provides the rebate after the sale.

For example, a $250 toaster oven comes with a $50 manufacturer mail-in rebate offer. A customer buys it for $250 and mails in the required information to receive the manufacturer’s $50 rebate. The store must collect tax on the $250 toaster oven price.

An instant manufacturer rebate the store deducts at checkout is treated as a cash discount.

For example, if a $250 toaster oven has a $50 instant rebate, tax is due on the final price of $200.

A mail-in retailer rebate issued by the retailer reduces the taxable sales price of the item when the rebate is processed and the refund is issued. In this case, the customer must pay tax on the item’s original price. When the store processes the rebate request, the store must give the customer the rebate and refund the tax collected on the rebate amount.

For example, a customer buys a television for $250 with a $25 mail-in retailer rebate. The tax is based on the $250 price. When the store rebates the $25, the store must also refund the tax paid on the $25 rebate amount.

SNAP Benefits

Taxable items purchased in a grocery or convenience store are exempt when legally purchased with Supplemental Nutrition Assistance Program (SNAP) benefits. For more information about SNAP benefits, contact Texas Health and Human Services.

Taxable Services

These services are taxable:

photo or film processing services, including
- enlargements
- negatives
- pictures-on-disk
- prints
- processing at self-use kiosks
- retouching
- slides
rentals, including
- electronic equipment
- floor and other cleaning equipment
- movies

Taxable Items – Examples

adhesive tape
alarm clocks
ale
aluminum foil
ammonia
ammunition
appliances
automotive items (oil, transmission fluid, antifreeze, etc.)
baby care products (oil, lotion, powder, etc.)*
baby clothing
bags
baskets
batteries
beauty supplies
beer
birdseed (except wild birdseed)
bleach
books
breath mints
brooms
brushes
bubble bath
calendars
cameras
cannabidiol (CBD) products**
candles
candy
canning supplies
carbonated beverages
cards
charcoal briquettes
charcoal lighter fluid
cigarettes
cigarette lighters
cleaners
clothespins
clothing
coffee pots
coffee (canned or bottled that contain natural or artificial sweeteners)
cologne
contact lens care items**
cosmetics
costumes
cotton balls
cough drops*
dental floss
detergent
deodorant (not including antiperspirant)
deodorizers
diapers
diluted juices (50 percent or less fruit juice)
dishcloths and towels
dishes
disinfectant
distilled spirits
drinks (soft drinks – canned, bottled, frozen or powdered, including all “-ades” and punches)

dye
eating utensils
electrical supplies
electronic equipment
eyeglasses**
fabric softeners
fertilizer
fishing tackle
firearms
flashlights
floor wax
flower seeds
flowers
flyswatters
freezer paper and tape
furniture
fuses
garbage bags
garden supplies
gift wrap
glassware
gum
hair care products (shampoo, spray, conditioner, etc.) *
hair coloring
hairpins and accessories
hammers
hardware
holiday trees and decorations
housewares
ice
ice chests
ice cream salt
ice cream sundries (when sold in an individual-sized portion)
insecticides
irons
jars
jewelry
keys
kitchenware
laundry detergent and additives
lawn chairs
light bulbs
liquor
lotions*
lubricants
lye
matches
magazines
mops, mop handles and mop heads
mothballs and spray
motor oil
mousetraps
movies
music
nails
notebooks
nuts (candy-coated)
nursery stock (except annual vegetable plants)
paper items (all)

paraffin
peat moss
pencils and pens
perfume
pet food
pet supplies
photo processing
pictures and frames
pipes
plastic items
poisons
polish
popsicles
popcorn (when candy-coated or sold hot in the store)
pots and pans
powder (face, body and cleaning)
prophylactics
razors and blades
rental items
ribbons
sandwiches (that are not frozen)
sandwich bags
school supplies
scouring pads
shaving cream and lotion
shampoo and conditioner *
shoelaces
silverware
snack items (individual-sized)
snuff
socks
soap and detergent
soft drinks (carbonated and non-carbonated)
sponges
sports equipment
sprays
starch
stationery and cards
sunglasses
tape (packaging)
tea (canned or bottled that contain natural or artificial sweeteners)
thread and sewing accessories
toilet tissue
tools
toothbrushes
toothpaste (non-fluoride)*
toothpicks
toys
tobacco products
towels
watches and clocks
water (when flavored)
water softeners
water softener salt
wax removers
whisk brooms
wine
wire

* Unless required by the FDA to be labeled with a Drug Facts panel or sold to a customer with a prescription

**Unless sold to a customer with a prescription

Nontaxable Items – Examples

Baby Products

baby food – canned, packaged, etc.
milk – canned, dry, etc.
formula
medicated products

Bakery Items – (nontaxable when sold at a grocery and convenience stores without eating utensils or heated)

Baking Supplies

almond paste, marzipan
baking chocolate (blocks and chips)
cake mixes
canned fillings
cookie mixes
cooking oils, shortening and lard
cornmeal
dried fruits
edible cake decorations (sprinkles, confetti, etc.)
flour
food coloring (liquid, gel and powdered)
icing and icing mixes
leavening agents (baking powder, baking soda, yeast)
marshmallows
molasses
muffin mixes
nuts (not candy-coated)
seasonings (salt, pepper, herbs, spices, etc.)
spices
sugar
sugar substitutes
syrups

Condiments and Spices

catsup
herbs
mayonnaise
mustard
pickle relish
pickles
salad dressings (mixes or bottled)
salsas (canned and fresh)
sauces and liquid seasonings (fresh, canned and bottled)
spices
vinegar

Dairy Products

butter and margarine
cheese and cheese foods, including cottage cheese and cream cheese
cream (whipping, half and half, heavy, etc.)
creamers
lactose-reduced milks and dairy products
milk and milk substitutes (canned and dry)
sour cream
yogurt

Beverages

coffee (beans, ground and instant)
coffee flavorings (powdered and liquid)
fruit and vegetable juices (more than 50 percent fruit or vegetable juice, canned, bottled or frozen)
tea (instant, bags, loose, including herbal teas)
water (carbonated or non-carbonated, non-flavored)

Eggs and Egg Substitutes

egg substitutes (fresh and frozen)
fresh eggs

Grains and Pasta

Meat, Poultry and Fish

canned meats
dried meats
deli meats
fresh and frozen beef, poultry, pork and fish
lunch meats
meat substitutes
sausages

Nutritional Supplements (product must meet the definition of a dietary supplement)

herbal products
mineral products
vitamins

Over-the-Counter Drugs and Medicines (when required by the FDA to be labeled with a Drug Facts panel)

acne treatment products
allergy treatment products
analgesics
antacids
antibacterial personal care items (hand sanitizer, wipes, soap)
antibiotic topical ointment
anti-diarrhea and anti-nausea products
anti-fungal products
antihistamines
antiperspirants
antiseptic sprays, creams and lozenges
cold remedies
cough suppressants
dandruff products
expectorants
head lice treatments
hemorrhoid treatments
insect bite treatments
laxatives
nicotine gum or patches and smoking cessation aids
pain relievers (aspirin, ibuprofen, acetaminophen)
sedatives and sleep aids
sunscreen
toothache treatments

Produce

canned fruits and vegetables
dried fruits and vegetables
fresh fruits and vegetables (bulk, wrapped or packaged)
frozen fruits and vegetables

Other Categories

frozen meals
packaged mixes for beef, fish, pork and poultry
packaged mixes for vegetables, beans and rice
sauces (pasta, tomatoes, garlic)
soups (canned, dry mix or frozen)

Snacks (unless sold in an individual-sized portion)

breakfast bars
chips
corn nuts
crackers
frozen yogurt
granola bars
ice cream
ice pops, juice pops, sorbet and other frozen fruit items containing less than 50 percent fruit juice by volume
ice cream sundries (ice cream bars, ice cream sandwiches, etc.)
nuts (not pine nuts or candy-coated)
popcorn
pork rinds
pretzels
protein, nutrition or sports bars (unless labeled and marketed as candy)
pumpkin seeds
sherbet
snack mix
sunflower seeds
trail mix
yogurt bars

Wound Care Items

adhesive bandages (including strip adhesive bandages, large adhesive bandages and butterfly closures)
corn cushions
gauze rolls and pads
liquid bandage products
medical tape

Grocery and Convenience Stores

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Grocery and Convenience Stores

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Required Applications:

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