Overview for Retail Food and Beverage Vendors
If you are a convenience store, restaurant, or bar owner in Indiana, then you should know how food and beverages are taxed.
A local food and beverage tax rate in Indiana is typically 1% of the gross retail income received from taxable food and beverage transactions. However, when both a county and a municipality located within that county have imposed a food and beverage tax, the rate is 2% in the municipality.
Taxable Transactions
Localities that have adopted the food and beverage tax apply it whenever:
“Food or beverage is furnished, prepared, or served by a retail merchant for consumption at a location or on equipment provided by the retail merchant….”
Definition of “For Consumption at a Location or on Equipment Provided by the Retail Merchant”
This applies when:
- Food or drink is served by a retail merchant off the merchant’s premises
- Food or drink is sold in a heated state or is heated by a retail merchant
- Food or drink is made of two or more food ingredients, mixed or combined by a retail merchant for sale as a single item
- (Other than food that is only cut, repackaged, or pasteurized by the seller and eggs, fish, meat, poultry, and foods containing these raw animal foods requiring cooking by the consumer as recommended by the federal Food and Drug Administration)
- Food sold with eating utensils provided by the retail merchant
- Eating utensils include plates, cups, napkins, and straws
- Does not include containers or packages used to transport food
Special Cases
- Catering activities are subject to the tax
- Food sold at deli counters in grocery stores is also taxed
Exemptions
The following are not subject to the food and beverage tax:
- Food that is only cut, repackaged, or pasteurized by the seller
- Sales of eggs, fish, meat, and poultry that require cooking by the consumer
Relationship to Sales Tax
The food and beverage tax is similar to a sales tax:
- It is “imposed, paid and collected in the same manner as the sales tax”
- Food that is exempt from the state sales tax must also be exempt from the food and beverage tax
- Retailers must use different returns for sales tax and the food and beverage tax