Tennessee state officials want businesses selling food to start preparing for reduced rates of sales and use tax. Effective July 1st, those tax rates on sales of food and food ingredients will be cut to 5.25%, down from 5.5%.
Local sales and use tax rates may be added. According to the Tennessee Department of Revenue, changes to cash registers and accounting systems should be completed by that date. However, businesses must continue to collect and remit the existing rate through June 30. Prepared food, dietary supplements, candy, alcoholic beverages and tobacco continue to be subject to the general state sales and use tax rate of 7% plus the applicable local sales and use tax rate.