Haslam Touts Food-Tax Reduction

The state sales tax on food is set to drop a little bit next month. On Monday Governor Bill Haslam held a ceremonial signing for the new law, which lowers the current 5.5 percent tax on groceries.

The new law will save Tennesseans $0.25 in taxes on every hundred dollars worth of groceries. At the Kroger in Nashville’s Bordeaux neighborhood, Linda Phillips says it’s better than nothing.

REPORTER: “How much of a difference does that make to you?”
PHILLIPS: “Well, very little, but any decrease is an increase for my household, so it definitely helps.”

But Shaterial Starnes figures the savings could add up.

STARNES: “Collectively, I guess over a period of time, it can make a difference. My preference would be there not be any sales tax on food. In other states there’s no sales tax on food, so…”

The quarter-percent tax cut amounts to about $21 million in next year’s state budget. For now the governor has said he’d like to push the rate a little further down, to 5 percent, over the next few years. As part of Haslam’s budget this year lawmakers also cut the inheritance tax on million-dollar estates.

The food-tax reduction won’t apply to prepared foods from restaurants, or candy or alcohol.