Virginians will see lower grocery bills in the new year thanks to a lower sales tax rate. The state is repealing its 1.5% grocery tax, which covers sales of food for home consumption and certain essential personal hygiene products, beginning Jan. 1.
According to the Virginia Department of Taxation, most staple grocery items and cold, packaged prepared foods qualify for the reduced sales tax rate. Alcoholic beverages, tobacco, prepared hot foods packaged for immediate consumption on or off premises, and seeds and plants used to grow food for home consumption do not qualify for the reduced rate.
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A 1% grocery sales tax that goes to local jurisdictions and funds things such as schools, fire and police departments, will remain in place throughout the state.
“I think the layering of sales tax, of grocery taxes, of food taxes on top of property taxes, car taxes and real estate taxes is really a tough thing for Virginians,” said Governor Glenn Youngkin.
"Remember, businesses and people make a decision on 'where I want to live,’" Youngkin continued. "And we are now turning the tide in getting people and businesses to stay in Virginia, but we're going to need some help from the localities as well."
Following Virginia's move, there are 12 states that still impose a grocery sales tax, including Arkansas, Illinois, Missouri, Utah, Alabama, Hawaii, Tennessee, Oklahoma, South Dakota, Idaho, Kansas and Missouri. According to the Center on Budget and Policy Priorities, 10 of those states offer a lower tax rate for groceries than the general sales tax rate or provide a tax credit. Alabama, Mississippi and South Dakota, meanwhile, tax groceries at the full state sales tax rate.