Food, Non-Qualifying Food, and Prepaid Meal Plans
Qualifying "Food"
A 2.00% local rate of sales or use tax applies to retail sales and purchases for storage, use, or consumption of qualifying food. The transit and other local rates do not apply to qualifying food.
Non-Qualifying Food (Dietary Supplements, Food Sold Through a Vending machine, Prepared Food, Certain Bakery Items, Soft Drinks, Candy)
The retail sale and purchase for storage, use, or consumption of non-qualifying food is subject to the general State and applicable local and transit rates of sales and use tax. Non-qualifying food includes: dietary supplements; food sold through a vending machine; prepared food, other than bakery items sold without eating utensils by an artisan bakery; soft drinks; and candy.
Prepaid Meal Plans
The sales price of or the gross receipts derived from a prepaid meal plan are subject to the general State and applicable local and transit rates of sales and use tax. A bundled transaction that includes a prepaid meal plan is taxable in accordance with N.C. Gen. Stat. § 105-164.4D.
Gross receipts derived from sales of food, non-qualifying food, and prepaid meal plans and the applicable sales and use tax thereon are to be reported to the Department on Form E-500, Sales and Use Tax Return, or through the Department’s online filing and payment system.
Technical Publications for Food, Non-Qualifying Food, and Prepaid Meal Plans
- Sales and Use Tax Bulletins - See Food (Prepared Food, Candy, Prepaid Meal Plan, Etc.) Bulletin
- Important Notice: Exemption for Packaging Items for Food and Prepared Food Under a Prepaid Meal Plan (7-21-16)
- Important Notice: Sales of Bakery Items with Eating Utensils by Artisan Bakeries (9-10-14)
- Important Notice: Prepaid Meal Plans (6-23-14)
- Important Notice: Sales by Bakery Thrift Store (6-16-14)
- Directive SD-13-1: Prepared Food Sold to a College Student Attending an Institution of Higher Education (12-9-13)
- Important Notice: Sales of Baked Goods by Artisan Bakeries (11-08)
- Important Notice: Taxation of Food and Prepared Food (6-06)
- Directive SD-98-4: Complimentary Meals or Snacks (9-1-98)