Effective July 1, 2017, Tennessee will reduce the state sales and use tax rate on food and food ingredients from 5% to 4%. Note that the applicable local sales and use tax rate (up to 2.75%, depending on the locality) also applies to these sales. “Food and food ingredients” are defined 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” does not include alcoholic beverages, tobacco, candy, dietary supplements or prepared food, which continue to be subject to the general state sales and use tax rate of 7%, plus the applicable local tax rate. (Important Notice No. 17-07, Tennessee Department of Revenue, April 2017)