Grocery sales tax reduction begins in Virginia

ROANOKE, Va. (WDBJ) - Virginia is one of 13 states that taxes groceries. A new law cutting those taxes went into effect January 1.

With inflation, prices have increased across the board. But Virginians are going to see a bit of relief when they hit the grocery store this new year.

Virginians have been getting taxed 2.5% at the supermarket. But in 2023 that rate is now 1%.

Feeding Southwest Virginia President & CEO Pamela Irvine says the cut comes at a time when they are seeing an increase in need.

“I think every little bit helps. And I was very glad to see that,” said Irvine. “Because, you know, we’re still seeing high numbers. We’re seeing an increase in some of our agencies and some of our food distribution sites.”

Southwest Virginia has the highest food insecurity rate in the state.

“Our neighbors have struggled for some time now to put food on the table. And with the increase in groceries, the struggle has become even more challenging,” explained Irvine.

According to the personal finance company SoFi, the average person in Virginia spends $3,538 a year on groceries. That means an average family of four spends $14,152 a year on groceries. The 1.5% grocery tax reduction would save that family $212 a year.

“That means they can spend that amount of money on medicine, utilities, rent, or house payment,” added Irvine. And while Feeding Southwest Virginia says this is a step in the right direction, there are other possibilities to alleviate challenges, like fixing the benefits cliff.

“If an individual is receiving public benefits. If they have any gain in their income, they immediately start losing benefits. Our recommendation is (to) give individuals 12 months to 15 months of a transitional period,” said Irvine.

Another challenge is that the Emergency SNAP benefits in Virginia have not been extended past December.

What qualifies as food for home consumption?

According to the Virginia Tax website, most staple grocery items and cold-prepared foods packaged for home consumption qualify for the reduced sales tax rate.

Items that don’t qualify for the reduced rate include:

• alcoholic beverages
• tobacco
• prepared hot foods packaged for immediate consumption on or off premises
• seeds and plants used to grow food for home consumption.

Certain types of vendors are presumed to be selling food for immediate consumption and are not allowed to charge the reduced rate. These include:

• caterers
• concession vendors
• entertainment facilities (theme parks, stadiums, etc.)
• fair and carnival vendors
• gift shops
• hamburger and hot dog stands
• honor snack vendors
• ice cream stands and trucks
• mobile food vendors
• movie theaters
• newsstands
• vending machine vendors

Any retail store whose sales of food for immediate consumption constitutes 80% or more of its total sales also may not charge the reduced rate. (A business that also sells motor fuels should include motor fuel sales when determining if it meets the 80% rule.)

For more information on the reduced tax on food for home consumption, including detailed lists of eligible foods, see Tax Bulletin 5-78.

What qualifies as an essential personal hygiene product?

Essential personal hygiene products that qualify for the reduced tax rate:

• diapers
• disposable undergarments
• pads designed to protect undergarments
• bed sheets
• pads designed to protect bed sheets and mattresses
• incontinence products designed to be inserted in the body

Feminine hygiene products:

• sanitary napkins
• sanitary towels
• tampons
• menstrual sponges
• menstrual cloths and pads
• menstrual cups
• pantyliners
• other products used to absorb or contain menstrual flow

For more information on the reduced rate for essential personal hygiene products, please see Tax Bulletin 19-8.

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