Kansas Reduces Sales and Use Tax Rate on Food and Food Ingredients

Effective January 1, 2024, Kansas’s state sales and use tax rate on food and food ingredients and certain prepared food is reduced to 2%. This is part of a planned reduction in the tax rate on food and food ingredients and certain prepared food. Previously, the rate was reduced from 6.5% to 4% effective January 1, 2023. Starting on January 1, 2025, the rate will be reduced to 0%. Note that this only applies to the state portion of the sales and use tax rate. Local sales and use taxes still apply.

Food and food ingredients are typically thought of as “grocery store food items.” More specifically, Kansas defines “Food and food ingredients” as “substances, whether in liquid, concentrated, solid, frozen, dried or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. “Food and food ingredients” includes bottled water, candy, dietary supplements, food sold through vending machines and soft drinks. “Food and food ingredients” does not include alcoholic beverages or tobacco.”

Generally, “prepared food” is food that is:

• Sold in a heated state or heated by the seller; or
• Two or more food ingredients mixed or combined by the seller for sale as a single item; or
• Sold with eating utensils provided by the seller.

In order for “prepared food” to be taxed at the reduced state sale and use tax rate, it must be sold without eating utensils (such as plates, forks, knives, etc.) provided by the seller; and it must be one of the following:

• Sold by a food manufacturer or processor in subsector NAICS 311 (which are industries that transform livestock and agricultural products into products for intermediate or final consumption), except NAICS 3118 (which are primarily engaged in one of the following: (1) manufacturing fresh and frozen bread and other bakery products; (2) retailing bread and other bakery products not for immediate consumption made on the premises from flour, not from prepared dough; (3) manufacturing cookies, crackers, and dry pasta; (4) manufacturing prepared flour mixes or dough from flour ground elsewhere; or (5) manufacturing tortillas;) or
• Food, including meat or seafood, sold in an unheated state by weight or volume as a single item; or
• Bakery items including bread, rolls, biscuits, bagels, croissants, pastries, donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies and tortillas; or
• Food sold that ordinarily requires additional cooking rather than just reheating by the consumer prior to eating.

The Kansas Department of Revenue has provided more details and examples on its Food Sales Tax Rate Reduction webpage. Sellers of food and food ingredients and prepared food should adjust their selling systems accordingly to account for the tax rate changes so different types of food items are taxed correctly. (Pub. KS-1223, Food Sales Tax Rate Reduction, Kansas Department of Revenue)