UT Reduces Food Sales Tax Rate

On March 17, 2006, the Governor of Utah signed House Bill 109 (HB 109) into law. Instead of exempting food and food ingredients from Utah sales and use tax as originally planned, the law taxes them at a reduced rate of 2.75%. Bundled transactions of food and food ingredients and tangible personal property items are taxable in their entirety at the standard 4.75% rate. Food, food ingredients, and prepared food sold in restaurants remain taxable at the full tax rate as well. However, the same food, food ingredients, and prepared food sold outside a restaurant venue is taxable at the 2.75% tax rate. Vendors collecting sales tax on food and food ingredients at the new rate can retain a portion of the taxes collected. The law takes effect on January 1, 2007. For an update on this news item, click here. (Chapter No. 282, effective January 1, 2007)

Posted on April 5, 2006