Understanding New York Food Tax: Key Changes in 2025

Understanding the New York food tax is essential for consumers and businesses, as the state has specific rules on which food items are taxable and which are exempt. While most groceries remain tax-free, prepared meals, beverages, and certain snacks may be subject to state and local sales tax. This guide will break down New York's food tax laws, helping you navigate exemptions, taxable items, and compliance requirements.

Is Food Taxable In New York?

In New York, whether food is taxable depends on how it is sold, where it is sold, and whether it qualifies for an exemption. While most unprepared grocery items are tax-exempt, prepared foods, restaurant meals, and certain beverages are subject to New York sales tax. The rates vary depending on local tax laws, as some counties and cities impose their own additional taxes.

Heated and Prepared Foods

In New York, heated and prepared foods are subject to sales tax, regardless of where they are sold. This includes hot meals from restaurants, delis, supermarkets, and convenience stores, as well as items that are cooked, heated, or assembled for immediate consumption.

Even if a grocery store sells typically tax-exempt items like rotisserie chicken or hot soup, they become taxable when sold in a heated state. Additionally, pre-packaged meals that require minimal preparation, such as sandwiches, salads, and hot buffet items, are also subject to sales tax under New York's food tax laws.

Cold Foods

In New York City, cold foods are generally tax-exempt when sold as groceries for home consumption, such as packaged salads, yogurt, and deli meats. However, if cold food is sold as a ready-to-eat meal (like a pre-made salad from a salad bar or a sandwich from a deli counter), it becomes taxable.

Additionally, if a cold food item is sold with a hot beverage or as part of a combination meal, the entire purchase may be subject to sales tax. Businesses must carefully distinguish between grocery items and prepared foods to ensure proper tax collection under NYC sales tax rules.

What's Taxable: A 2025 Update

The following categories of food are typically subject to sales tax:

• Restaurant meals and prepared foods (including hot or ready-to-eat food from delis, supermarkets, and convenience stores)

• Soft drinks, sodas, and fruit-flavored beverages with less than 70% real juice

• Candy and confectionery items

• Alcoholic beverages, including beer, wine, and spirits

Restaurants, fast food chains, and cafes must charge sales tax on all prepared meals, including takeout, dine-in, and delivery orders.

• Self-service salad bars and hot buffets are taxable.

• Catered food services are always subject to tax.

New York Food Tax Exemptions and Special Cases

While most groceries in New York are exempt from sales tax, there are special cases and exemptions that businesses and consumers should be aware of. Certain food items may qualify for tax exemptions when purchased for resale, meaning wholesalers and retailers can avoid paying sales tax upfront but must collect it when selling to consumers.

Additionally, while New York does not currently have sales tax holidays for food, other exemptions apply, such as food purchased with SNAP benefits (food stamps), which is always tax-free.

Here's a list of foods that are tax-exempt in NYC:

• Fresh produce, meat, poultry, and dairy products

• Unprepared packaged foods (e.g., canned goods, bread, cereal)

• Baby food and formula

• Bottled water (non-carbonated and unsweetened)

• Food purchased with food stamps (SNAP benefits)

Businesses that meet economic nexus thresholds must collect and remit sales tax on taxable food sales, even if they operate from out-of-state, ensuring compliance with New York's tax laws.

FAQs

Are groceries taxable in New York?

Most groceries in New York are tax-exempt, including fresh produce, dairy, bread, and packaged foods meant for home consumption. However, some items like candy, soda, and prepared foods are taxable under New York sales tax laws.

Are meals taxable in New York?

Yes, meals purchased at restaurants, cafes, and food service establishments are subject to sales tax in New York. This includes dine-in, takeout, and delivery orders, as well as prepared foods from grocery store delis and buffets.

Are beverages taxable in New York?

Some beverages are taxable, such as soda, soft drinks, fruit-flavored drinks (with less than 70% juice), and alcoholic beverages. However, bottled water, coffee, tea, and milk are generally exempt from sales tax when sold for home consumption.

Overview of Recent Legislation

As of March 2025, recent legislative developments in New York City have introduced changes affecting food sales tax:

Surcharge on Online Delivery Sales

Assembly Bill A5723 proposes implementing a surcharge on online delivery sales within New York City. This legislation aims to address the increasing volume of online food deliveries and their impact on local infrastructure.

Increase in Vending Machine Exemption Threshold

Senate Bill S5453 seeks to amend the tax law by raising the exemption threshold for food and drink sold through vending machines. The bill proposes increasing the current exemption amount from $1.50 to $3.00 for purchases made with physical currency and from $2.00 to $3.50 for purchases made with any form of payment.

Sales Tax Reduction for Small Businesses

Senate Bill S1115 aims to reduce the sales tax rate for goods and services purchased from certain small businesses in New York. Specifically, it proposes lowering the tax rate from 4% to 2% for purchases made from businesses that employ twenty or fewer persons, are residents of New York State, are independently owned and operated, and are not dominant in their field.

These legislative initiatives reflect ongoing efforts to adapt New York City's tax policies in response to evolving economic and technological landscapes, particularly concerning food sales and related services.

Frequent tax legislation changes—such as new sales tax surcharges, exemptions, and rate adjustments—make it increasingly difficult for businesses to stay compliant, especially when selling across multiple jurisdictions. Kintsugi simplifies sales tax management by automatically updating tax rates, tracking nexus exposure, and ensuring accurate filing so businesses can focus on growth without worrying about tax compliance.

For companies selling foods in New York, let Kintsugi manage your sales tax because it's what we do best. Book a demo or sign up today to experience freedom from sales tax headaches and stress.