Is Food Taxed In Chicago?

You pay a little more for almost everything you buy when you live in Chicago, and eating is no different. "Is this food taxed?" may be on your mind when you go grocery shopping or place an order for takeout. In Chicago, the answer isn't precisely yes or no. You may or may not be aware that additional sales tax has been added to your purchase, depending on the type of food you're buying and where you're buying it. Let's now examine the taxation of food, its exemptions, and its overall mechanism.

The Basics Of Sales Tax In Chicago And How It Impacts Food Purchases

Sales tax is an extra fee tacked on to the price of things when you purchase them, and in Chicago, it's tacked on to nearly everything you purchase. The city tacks on its own sales tax in addition to the standard Illinois state tax rate, which means your final bill is more than the sticker price you see. But not all foods are taxed the same. Whether or not your food purchase is taxed has everything to do with where and how it's being sold. Some food is completely exempt from sales tax, and other food products have an added fee.

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The Kind Of Food You Buy Determines Whether Food Is Taxed In Chicago

There is no sales tax on food that you plan to cook at home. It's not illegal to buy bread, milk, eggs, fresh veggies and fruits, and other basic foods in Chicago. You won't have to pay sales tax on the food you buy for a week, and your food budget is exactly what you planned. Once the food is ready to eat, however, the tax applies.

Chicago Restaurants And Food Vendors Must Pay Taxes On Their Food Sales 

In Chicago, food taxes are most frequently found at restaurants. Food is typically deemed prepared and taxable whether you eat in, have it delivered to your door, or order takeout. Restaurant meals are subject to a higher-than-normal tax rate of approximately 10.25%. Don't expect a modest boost to your bottom line whether you're eating in or taking food to go. The same is true with food trucks, street food, and any other fast food you come across while exploring the city. 

The City Of Chicago Does Not Tax Groceries That Are Bought To Be Eaten At Home

Most of the food you buy at a Chicago grocery store isn't taxed, so you can stock up on things like cereal, pasta, meat, and veggies without having to pay a little extra. The exception only applies if the food is meant to be used at home and not eaten right away. No matter if you're buying things for a big pot of spaghetti for dinner or a sandwich for lunch, you won't have to pay extra sales tax. 

There Are Certain Exceptions To Certain Foods That Are Taxed In Chicago

Even though you might consider them basic supermarket items, there are some meals in Chicago that are subject to taxes. The most common foods in this group are candy and soda. Because they are processed, unnecessary, or contain a lot of sugar, Illinois does impose taxes on them even if they might be considered food. This means that sales tax will be applied to the price when you pick up a bag of candies or a can of soda. Therefore, even if the majority of food is tax-free, these small delights will cost you a little more.

Sales Tax Is Applied On Hot Foods From Grocery Stores That Are Intended For Immediate Consumption

Curiously, hot items purchased at the grocery store that are intended for immediate consumption are subject to taxes. When you grab a piece of pizza or a hot rotisserie chicken at a grocery store for a fast lunch, sales tax is charged. However, there won't be any tax applied if you purchase those goods cold or uncooked and intend to use them in a later meal. When you order a hot meal to go or grab a sandwich at the deli counter, the sales tax is added as long as the product is intended to be eaten immediately.

Chicago's Sales Tax Affects Your Grocery And Restaurant Budget 

Knowing when Chicago taxes foods can help you make better budget choices. Unless you're buying food to cook at home, you won't have to worry about extra taxes on most of your purchases. Don't forget that sales tax will be added to restaurant and snack purchases if you like to eat out or grab food on the go. This can quickly mount up if you eat out a lot or typically visit food stands or convenience shops.

For example, the extra taxes on restaurants and ready-made foods help the city pay for important services like keeping the streets clean. Taxes on businesses, for instance, help pay for citywide cleaning projects. You can thank your taxes for helping to pay for public cleaning projects like refreshing your favorite park or making downtown better.

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Why Are Certain Foods Taxed In Chicago While Others Are Not?

Depending on whether a food is considered a "basic necessity" or more of a luxury, some foods are taxed while others are not. To help people afford food, basic items like bread, fruits, vegetables, and meats are excluded from sales tax. Candy, soda, and prepared hot food are examples of less essential commodities that are charged in order to pay for city services.

It also refers to the city budget as a whole. City services, building construction, and even cleaning the streets and public areas are funded by the prepared food fees. The city's beauty and smooth operation are a result of those extra tax funds.

Just like how the tax funds contribute to creating projects to maintain the cleanliness of the city, Deep Cleaning Chicago also dedicates its service to making sure the city is spotless and safe.

How To Shop Smarter In Chicago To Reduce Your Grocery Bill

Taxes are sometimes inevitable, but there are ways to shop more wisely and save a little cash. Choose to purchase fresh food, meat, grains, and other grocery products that are meant to be prepared at home. In this manner, you can avoid paying extra taxes. Make eating on the run a treat rather than a daily expense if you like doing so.

Another option is to purchase food at your neighborhood farmers' market, where some foods are tax-free. In addition to eliminating additional costs, you can receive locally grown, fresh foods that are easy to prepare at home.

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Food Taxation In Chicago Can Vary Based On What You Buy And How It's Prepared

Certain foods in Chicago are subject to taxes, while others are not. While food and beverages prepared in restaurants or convenience stores are subject to sales tax, groceries bought for domestic consumption are typically free. Although taxes are a given in the city, they also help to support and clean Chicago. You can plan and budget your meals if you are a wise consumer and know when food is subject to taxes. Remember the specifics of Chicago's food tax laws the next time you eat out or buy groceries, and you'll be able to enjoy the Windy City and save a little money!