A new sales tax holiday on food and food ingredients proposed by Governor Lee was approved earlier this year by the Tennessee General Assembly for the entire month of August.  Monday, the state-issued some important information about the tax holiday, which will begin at 12:01 on Monday, August 1^st, and end at 11:59 pm on Wednesday, August 31st.

During this period, “food and food ingredients may be purchased tax-free.”  The most common example of a dealer selling food and food ingredients is a grocery store.

Food and food ingredients are defined as “liquid, concentrated, solid, frozen, dried, or dehydrated substances that are sold to be ingested or chewed by humans and are consumed for their taste or nutritional value.”

Meal substitutes are considered food or food ingredients. Examples of meal substitutes include, but are not limited to, unsweetened breakfast bars or those containing flour, unsweetened dried fruit snacks, drinks such as Ensure or Boost, toaster pastries, and soup mixes.  The definition of food and food ingredients does not include alcoholic beverages, tobacco, candy, dietary supplements, or prepared food.  These substances are taxed at the general state sales tax rate of 7%.