Effective July 1, 2012, the sales and use tax rate applicable to food and food ingredients in Tennessee is reduced from 5.5% to 5.25%. The new law also requires that the local option sales tax, which under existing law can be in an amount up to 2.75%, be at a rate that is a multiple of 0.25%. Tennessee 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 of nutritional value. The definition does not include alcoholic beverages or tobacco. “Food and food ingredients” does not include prepared foods. (H.B. 3761, Laws 2012, effective as noted)