As of 2026, 37 states plus the District of Columbia no longer tax most grocery food at the state level. And that number just got bigger.
On January 1, Arkansas and Illinois both eliminated their state-level grocery taxes — joining Kansas, which did the same in 2025, and Oklahoma, which dropped its 4.5% food tax in 2024.
The trend is clear. States are removing taxes on food. But the details matter — especially if you're a seller.
It's simple math for lawmakers.
Grocery taxes hit low-income households hardest. Families who spend most of their income on food pay a bigger share of that income in tax. As grocery prices have stayed elevated, the political pressure to eliminate food taxes has been hard to ignore.
The result: a national rollback that's been building for years and is accelerating fast.
Illinois eliminated its 1% state grocery tax — but it simultaneously gave municipalities the option to impose their own 1% local grocery tax.
The result? Roughly 600 out of 1,300+ Illinois communities opted in.
So for many Illinois residents, the grocery tax didn't disappear. It just changed hands — from the state to their city or county.
If you're an ecommerce seller shipping food products into Illinois, this means your tax obligations now depend entirely on the delivery address. Every ZIP code is potentially different.
Not every state has followed the trend. As of mid-2026, around ten states still impose a statewide tax on groceries.
Here's where it stands:
Tennessee is the most active right now. In 2026, lawmakers have introduced over half a dozen bills that would reduce or eliminate the state's 4% grocery tax — ranging from a full elimination to a one-day-per-month sales tax holiday on the fifth of each month.
Virginia looked close to eliminating its remaining 1% grocery tax in 2026, but the bill was pushed to the 2027 session.
Hawaii is weighing more than ten separate proposals.
The rollback isn't slowing down.
If you sell food products and ship to customers across multiple states, you have homework to do.
The definition of "groceries" is not universal. Most states exempt basic staples — bread, produce, dairy, meat — but the line between "grocery item" and "prepared food" varies. A bag of chips sold in a family-size package may be tax-exempt in Texas, while the individual-serving version of the same product is taxable.
When states eliminate grocery taxes while preserving local ones — like Illinois — sellers face a compliance patchwork that requires address-level accuracy, not just state-level rules.
This is one of those changes that looks like a simplification on the surface and creates complexity underneath.
Not sure how grocery tax changes affect your business? Book a free consultation with our team at sales.tax. We'll review your product taxability, identify where you have exposure, and help you stay compliant as the rules keep changing.