California does tax food, but only some of it. Groceries you take home are exempt from sales tax, while hot prepared food, restaurant meals, food eaten on the seller’s premises, carbonated drinks, and alcohol are taxable. The statewide base sales tax rate is 7.25%, and most cities add local district taxes that push the actual rate higher.1California Department of Tax and Fee Administration. California City and County Sales and Use Tax Rate Information Revenue and Taxation Code Section 6359 draws the line between exempt “food products for human consumption” and taxable prepared food, and in practice the distinction turns on temperature, location, and how the food is packaged.2California Department of Tax and Fee Administration. Sales and Use Tax Law – Section 6359
Groceries Are Exempt by Default
Nearly everything you put in a grocery cart qualifies as an exempt food product: fresh produce, meat, fish, eggs, dairy, bread, cereal, spices, flour, nuts, peanut butter, cooking oil, canned goods, frozen meals, baby food, and snack items.3California Department of Tax and Fee Administration. Regulation 1602 – Food Products Candy, confectionery, and chewing gum also qualify, which surprises people arriving from states that tax candy separately.
Noncarbonated bottled water, fruit juices, vegetable juices, and milkshakes and other milk-based drinks are exempt too.3California Department of Tax and Fee Administration. Regulation 1602 – Food Products The exemption covers both state tax and all local district taxes, so an exempt item is fully untaxed everywhere in California.
What’s Always Taxable
Hot Prepared Food
Any food sold in a heated condition is taxable, whether you eat it at the restaurant or take it home. Hot pizza, soup, rotisserie chicken, and heated burritos all qualify. If the food was intended to be sold hot, incidental cooling doesn’t save it: a container of hot soup that drops to lukewarm on the counter is still a hot prepared food product because the seller prepared it to be sold hot.4California Department of Tax and Fee Administration. Sales and Use Tax Regulations – Article 8 – Regulation 1603
Combination meals that bundle hot and cold items at a single price are fully taxable. A combo that includes a hot sandwich and a cold drink for one price makes the entire sale taxable, including the cold component.2California Department of Tax and Fee Administration. Sales and Use Tax Law – Section 6359
Restaurants and Anything Eaten on the Premises
Food served at tables, chairs, counters, or on trays and tableware provided by the seller is taxable. That rule covers restaurants, cafeterias, delis with seating, and food courts.2California Department of Tax and Fee Administration. Sales and Use Tax Law – Section 6359 Even a cold salad eaten at a restaurant table is a taxable sale.
Food sold for immediate consumption at or near a location that provides parking primarily for customers eating there is also taxable. This is the rule that catches drive-in restaurants, even when the food goes out the window in a bag marked “to go.”
Carbonated and Alcoholic Beverages
Carbonated beverages and alcoholic drinks are excluded from the definition of “food products” entirely, so they’re always taxable.3California Department of Tax and Fee Administration. Regulation 1602 – Food Products Sodas, sparkling water, effervescent bottled water, beer, wine, and spirits all carry sales tax regardless of where you buy them or whether you drink them at home. One narrow exception: a carbonated product that is 100% natural fruit juice with no additives or preservatives qualifies as an exempt food product.5California Department of Tax and Fee Administration. Carbonated Fruit Juices
Cold To-Go Food
Cold prepared food sold for off-premises consumption is generally exempt. A cold sandwich, a tub of potato salad, a container of sushi, or a cold pasta salad from a grocery deli is not taxable when you take it home.4California Department of Tax and Fee Administration. Sales and Use Tax Regulations – Article 8 – Regulation 1603
Hot bakery items and hot beverages like coffee or tea sold individually for a separate price are treated like cold food for to-go purposes. A single hot coffee or a fresh-from-the-oven muffin purchased to go is exempt, provided the seller doesn’t bundle it with other items at a single price.6California Department of Tax and Fee Administration. Sales and Use Tax Annotations – 550.0090 Bundle that coffee with a pastry for one combined price, though, and the entire sale becomes taxable. There’s a bigger catch, too.
The 80/80 Rule
A seller triggers the 80/80 rule when two conditions are both true: more than 80% of the seller’s gross receipts come from food sales, and more than 80% of those food sales are already taxable (meals, hot food, on-premises eating).7California Department of Tax and Fee Administration. Regulation 1603 – Taxable Sales of Food Products Most sit-down restaurants meet both prongs.
When a seller meets the 80/80 rule, cold food in a form suitable for eating on the premises becomes taxable even if you order it to go. That pint of ice cream, that cold sandwich, that individual bottle of juice are all taxable at an 80/80 restaurant because the food is in a ready-to-eat form and the seller’s sales profile is dominated by taxable food. Sellers can elect to separately account for cold take-out orders and treat them as exempt, but most don’t bother and simply charge tax on everything.
Items that clearly wouldn’t be consumed on-site, such as a cold party tray, a whole uncut chicken, or bulk candy sold by the pound or more, remain exempt even from an 80/80 seller because they aren’t in a form suitable for consumption on the seller’s premises.
Vitamins and Dietary Supplements
California draws a hard line between food and dietary supplements, and the label does most of the work. Products sold in liquid, powder, granular, tablet, capsule, lozenge, or pill form that are labeled as a food supplement, dietary supplement, or dietary adjunct are taxable.3California Department of Tax and Fee Administration. Regulation 1602 – Food Products Vitamin pills, protein powder, fish oil capsules, and pre-workout supplements all fall here.
An herb capsule containing kelp and dandelion root is an exempt food product if the label doesn’t describe it as a supplement. The same capsule with “dietary supplement” on the label is taxable.8California Department of Tax and Fee Administration. Food Products – Regulation 1602 Annotations One exception runs the other way: a “complete dietary food” providing at least 70 grams of protein, 900 calories, and minimum daily requirements for key vitamins and minerals is exempt even if it looks like a supplement. Meal-replacement bars sold in bar form, and not labeled as a supplement, are generally treated as bakery products and exempt.
Food Bought With CalFresh (EBT)
Food paid for with CalFresh benefits is exempt from sales tax, even if the item would normally be taxable. Sodas, ice, and food coloring, all taxable when purchased with cash, become exempt when paid for with CalFresh benefits.9California Department of Tax and Fee Administration. Tax Guide for Grocery Stores – Industry Topics When a purchase is split between CalFresh benefits and cash, the CalFresh portion is applied first to items that would otherwise be taxable, which maximizes the exemption.10California Department of Tax and Fee Administration. Sales and Use Tax Law – Section 6373
Tips, Delivery, and Catering
Voluntary tips are not subject to sales tax. If you write in a tip amount on a restaurant check, that money stays outside the tax calculation. Mandatory service charges work the opposite way: any payment designated as a tip, gratuity, or service charge that the customer is required to pay gets included in taxable gross receipts, even if the restaurant later distributes the money to employees.11California Department of Tax and Fee Administration. Tips, Gratuities, and Service Charges – Publication 115 The automatic 18% gratuity added to large party checks is taxable for this reason.
Delivery fees follow the tax status of the food they’re attached to. If the delivered food is taxable, so is the delivery charge. If the food is exempt, the delivery charge is exempt too. When an order contains both, the delivery charges should be split accordingly.12California Department of Tax and Fee Administration. Sales and Use Tax Annotations – 557.0107 Delivery Charges – Food Product
Catering gets harsher treatment than a regular restaurant sale. Tax applies to the entire charge a caterer makes for serving meals, including the cost of food, use of dishes and equipment, and labor for serving. Event planning and coordination charges are also taxable when they’re connected to furnishing meals.7California Department of Tax and Fee Administration. Regulation 1603 – Taxable Sales of Food Products Separately stated charges for services genuinely unrelated to the food, such as entertainment or valet parking, are not taxable.
The Rate You’ll Actually Pay
The statewide base rate is 7.25%, and it applies everywhere in California.1California Department of Tax and Fee Administration. California City and County Sales and Use Tax Rate Information Most cities and counties add local district taxes on top, with individual district rates running from 0.10% to 2.00%. Some areas carry multiple overlapping district taxes. Combined rates range from 7.25% in areas with no district tax to over 10% in certain cities. You can look up the exact rate for any California address on the CDTFA’s website.
Those rates apply only to taxable food purchases: restaurant meals, hot prepared food, carbonated beverages, alcohol, and anything else that doesn’t qualify for the exemption. The exempt groceries that fill most shopping carts stay fully untaxed.