Understanding how to handle sales tax for food items can be difficult. This is especially true for Ohio-based operations, which have a unique set of rules regarding sales tax on food.

Whether you’re running a grocery store, restaurant, or delivery service, knowing what’s taxable and what’s not can greatly impact your bottom line. Below, we’ll explain what Ohio businesses should know about how food is taxed in their state.

What’s in this article?

• How is food defined from a tax standpoint?
  
• List of taxable and nontaxable food items for restaurants in Ohio
  
• Are groceries taxable in Ohio?
  
• Are meals and beverages taxable in Ohio?
  
• How Stripe Tax can help
  

How is food defined from a tax standpoint in Ohio?

Ohio has a specific tax definition of food. According to the Ohio Revised Code Section 5739.01 from the Ohio Department of Taxation, food is “substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value.”

This definition explicitly excludes the following categories:

• Alcoholic beverages

• Dietary supplements

• Soft drinks (defined as nonalcoholic beverages containing natural or artificial sweeteners)

• Tobacco

This definition focuses on the item’s intended purpose and consumption. For instance, while technically edible, baking soda is also sold for other uses. When packaged and sold for different purposes, these items would not be considered “food” for tax reasons.

List of taxable and nontaxable food items for restaurants in Ohio

Here’s a list of taxable and nontaxable food items for dining establishments in Ohio. While food and beverages might be exempt from sales tax in certain situations, service charges, delivery fees, and gratuity are typically taxable.

Taxable food items

• Meals consumed on premises: Any food or beverage served and consumed within the restaurant, including appetizers, entrees, desserts, coffee, tea, and alcoholic beverages.

• Soft drinks: Sweetened iced teas, energy drinks, and sports drinks.

• Dietary supplements: Vitamins, minerals, protein powders, and other supplements sold by the restaurant.

• Alcoholic beverages: Beer, wine, liquor, and mixed drinks.

Nontaxable food items

• Meals consumed off premises: Food that is ordered to go, for delivery, or through a drive-through is exempt from sales tax.

• Whole, unprepared foods: Raw fruits, vegetables, meat, poultry, and fish sold uncooked and not combined with different ingredients.

• Bakery items intended for home baking: Loaves of bread, rolls, and other items meant for home baking are usually exempt.

• Unsweetened beverages: Plain coffee, tea, unsweetened bottled water, and milk are exempt if consumed off premises.

• Ice: Ice sold by the restaurant for off premises consumption is typically exempt.

Are groceries taxable in Ohio?

Grocery tax refers to the state sales tax rate applied to food and beverages sold at grocery stores, and they can vary widely depending on the jurisdiction. In Ohio, for example, most grocery items are not taxable.

This grocery tax exemption covers basic food staples such as fruits, vegetables, meat, dairy, and unsweetened bottled water at everyday markets. However, what constitutes a “grocery item” can vary by state and locality, and Ohio has several exemptions to the grocery tax exemption.

The following categories found in grocery stores are exceptions to this rule and are subject to the state’s 5.75% sales tax plus local surcharges:

• Alcoholic beverages: Alcohol beverages, defined as beverages that have an ABV of 0.5% or higher, are taxable in Ohio. This category includes beer, wine, liquor, and other beverages.

• Soft drinks: Sweetened water and tea, soda, energy drinks, and sports drinks are subject to sales tax.

• Dietary supplements: Vitamins, minerals, protein powders, and other dietary supplements are subject to sales tax.

• Pet food: Pet food is taxable in Ohio.

Are meals and beverages taxable in Ohio?

The taxability of meals and beverages in Ohio depends primarily on where they are consumed and if they are considered “food” for tax reasons. Here’s a breakdown of how meals and beverages are assessed:

Meals

• Food consumed on premises: If you dine in at a restaurant, café, or any establishment where you consume the food on the property, the meal is taxable. This includes the food and beverages, condiments, or other items in the dish. Catered meals are also generally taxable when consumed on the premises where they are served.

• Food consumed off premises: Meals taken out or delivered for consumption elsewhere are exempt from sales tax. This applies to drive-through orders, restaurant takeout, delivery, and catered meals consumed off premises.

Beverages

• Soft drinks: Sweetened beverages, energy drinks, and sports drinks are always taxable, whether consumed on- or off-site.

• Unsweetened beverages: Plain coffee, tea, unsweetened bottled water, and milk are exempt from sales tax unless consumed on the property where they are sold. However, adding sweeteners or flavorings to these beverages can make them taxable.

• Alcohol: Alcohol is always taxable, no matter if consumed on- or off-site. It’s subject to a separate excise tax in addition to sales tax.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful API.

Stripe Tax helps you monitor your obligations and alerts you when you exceed a sales tax registration threshold based on your Stripe transactions. It can also register to collect tax on your behalf in the US and manage filings through trusted partners. Stripe Tax automatically calculates and collects sales tax, VAT, and GST on:

• Digital goods and services in all US states and over 100 countries
  
• Physical goods in all US states and 42 countries
  

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration, or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: If your business is in the US, let Stripe manage your tax registrations, and benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations. If you’re located outside the US, Stripe partners with Taxually to help you register with local tax authorities.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.