Sales Tax Guide · Updated November 7, 2026

Restaurant & Prepared Food Sales Tax by State

Published November 7, 2026 · Reviewed by the USA Sales Tax Calculator editorial team.

A grocery store and a restaurant can sell the same ingredients and still charge different sales tax. The difference is the prepared-food rule. Most states exempt unprepared food for home consumption, but they tax food that is sold ready to eat, food that is heated, food mixed by the seller, or food sold with utensils. The boundary is not always intuitive: a rotisserie chicken, a deli sandwich, a salad bar container, and a bag of chips can land on different sides of the line.

What counts as prepared food

The Streamlined Sales Tax definition is a useful starting point. Prepared food generally includes food sold in a heated state, food heated by the seller, food mixed or combined by the seller for sale as a single item, and food sold with eating utensils provided by the seller. The definition usually excludes food that is only cut, repackaged, or pasteurized, and it excludes food that the customer must cook. Bakery items, deli items, and salad bars are common gray areas.

State approaches

California taxes prepared food sold by restaurants and food vendors, while exempting most grocery food. The state's rule looks at whether the food is sold for consumption on or near the premises and whether utensils are provided.Texas taxes prepared food and restaurant meals, with a reduced rate for some food items and specific rules for mixed beverage sales. Floridataxes prepared food and restaurant meals at the combined state and local rate, while exempting most grocery food. New Yorktaxes restaurant food and prepared food, and it has detailed rules for "food sold for consumption on the premises."

Illinois taxes prepared food at the full combined rate while exempting unprepared food from the state rate.Tennessee taxes prepared food at the full rate and applies a reduced rate to grocery food.Virginia taxes restaurant meals at the full combined rate and applies a reduced state rate to grocery food.Oklahoma exempts unprepared food from the state rate but taxes prepared food at the full rate.

Alcohol and mixed beverages

Alcohol is usually taxed at the full sales tax rate even when food is exempt or reduced. Some states impose separate excise taxes on beer, wine, and spirits, and some impose a mixed-beverage tax on drinks sold by restaurants. A restaurant bill that combines food and alcohol may need to allocate the tax by line. If the register applies one rate to the whole bill, the tax may be too low on the alcohol or too high on the food.

Delivery, takeout, and service charges

Delivery charges are generally part of the taxable sales price when the product is taxable, and they may be taxable even when the food is exempt if the delivery is a separate service. A delivery fee, a service charge, and a tip are not the same thing. A mandatory service charge may be treated as part of the sales price, while a voluntary tip is usually outside the tax base. Third-party delivery platforms may collect tax on the food and the delivery fee separately.

Tips and gratuity

A voluntary tip is generally not subject to sales tax because it is not part of the seller's charge for the food. A mandatory gratuity or service charge may be treated as part of the sales price, depending on the state and how the charge is disclosed. A restaurant that adds an 18% service charge for large parties should check whether the charge is taxable and whether it is included in the amount on which tax is calculated.

How to check a restaurant receipt

1. Identify the food items and separate prepared food from packaged food.
2. Identify alcohol and any separate beverage charges.
3. Check whether delivery or service charges are included in the tax base.
4. Confirm whether the tip is voluntary or mandatory.
5. Compare the tax line with the combined rate for the restaurant location.

Use the state calculator for the restaurant's address:California,Texas,Florida,New York, andIllinois. Thegrocery exemption guide covers the unprepared-food side, theshipping guidecovers delivery charges, and the methodology pagedocuments the rate data.

Catering, buffets, and banquets

Catering is usually treated as prepared food, even when the food is delivered cold and served later. A buffet or banquet may be taxed as a single prepared-food charge, or the state may require the seller to allocate food, service, and facility charges. A mandatory service charge or gratuity may be part of the taxable sales price. The invoice should separate the food, the service, the facility rental, and any alcohol so the tax can be calculated correctly.

A caterer that also sells packaged food for pickup may have a mixed transaction. The packaged food may be grocery food while the prepared food is taxable. The seller should classify each line and apply the state's prepared food rule. The grocery guide explains the packaged-food side.

Delivery platforms and third-party fees

Third-party delivery platforms may collect tax on the food and on the delivery fee, or they may collect only on the food. The restaurant should reconcile the platform's tax collection with its own records. If the platform collects tax on the food but not on the delivery fee, the restaurant may owe tax on the fee, depending on the state's rule. Theshipping guideexplains how delivery charges are taxed.

Tips and service charges need a clear policy. A voluntary tip is usually outside the tax base; a mandatory service charge may be taxable. The restaurant should train staff to distinguish the two and to explain the tax line to customers. A receipt that combines a mandatory service charge with the food and applies one tax rate may overstate or understate the tax.