Food, Non-Qualifying Food, and Prepaid Meal Plans

A 2.00% local rate of sales or use tax applies to retail sales and purchases for storage, use, or consumption of qualifying food.  The transit and other local rates do not apply to qualifying food.

The retail sale and purchase for storage, use, or consumption of non-qualifying food is subject to the general State and applicable local and transit rates of sales and use tax.  Non-qualifying food includes: dietary supplements; food sold through a vending machine; prepared food, other than bakery items sold without eating utensils by an artisan bakery; soft drinks; and candy.

The sales price of or the gross receipts derived from a prepaid meal plan are subject to the general State and applicable local and transit rates of sales and use tax.  A bundled transaction that includes a prepaid meal plan is taxable in accordance with N.C. Gen. Stat. § 105-164.4D

For a business or person who is not registered with the Department and is required to collect and/or remit sales or use tax on food, non-qualifying food, or a prepaid meal plan, register online using the online business registration portal.  Gross receipts derived from sales of food, non-qualifying food, and prepaid meal plans and the applicable sales and use tax thereon are to be reported to the Department on Form E-500, Sales and Use Tax Return, or through the Department’s online filing and payment system.

Additional Information for Food, Non-Qualifying Food, and Prepaid Meal Plans

Technical Publications for Food, Non-Qualifying Food, and Prepaid Meal Plans