Businesses urged to prepare for new food tax rate

NASHVILLE, Tenn. (AP) -- State officials are encouraging businesses that sell food to begin preparing for a reduced rate of sales and use tax.

Effective July 1, the state sales and use tax rate on sales of food and food ingredients will be cut to 5.25 percent from 5.5 percent. Local sales and use tax rates may be added.

According to the Tennessee Department of Revenue, changes to cash registers and accounting systems should be completed by July 1. However, businesses must continue to collect and remit the existing rate through June 30.

Prepared food, dietary supplements, candy, alcoholic beverages and tobacco continue to be subject to the general state sales and use tax rate of 7 percent plus the applicable local sales and use tax rate.

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