Repeal Two Percent Local Grocery Tax.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 1032

Short Title: Repeal Two Percent Local Grocery Tax. (Public)
Sponsors: Representatives Chesser, Paré, Reeder, and Schietzelt (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Commerce and Economic Development, if favorable, Finance, if favorable, Rules,
Calendar, and Operations of the House
April 22, 2026
*H1032-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO EXEMPT GROCERIES FROM THE LOCAL SALES TAX. 2
The General Assembly of North Carolina enacts: 3
SECTION 1. G.S. 105-465 reads as rewritten: 4
"§ 105-465. County election as to adoption of local sales and use tax. 5
… 6
The county board of elections shall prepare ballots for the special election. The question 7
presented on the ballot shall be "FOR one percent (1%) local sales and use tax on items subject 8
to States sales and use tax at the general State rate and on food" rate" or "AGAINST one percent 9
(1%) local sales and use tax on items subject to State sales and use tax at the general State rate 10
and on food".rate." 11
…." 12
SECTION 2. G.S. 105-467 reads as rewritten: 13
"§ 105-467. Scope of sales tax. 14
(a) Sales Tax. – The sales tax that may be imposed under this Article is limited to a tax 15
at the rate of one percent (1%) of the following: 16
(1) A retailer's net taxable sales and gross receipts that are subject to the general 17
rate of sales tax imposed by the State under G.S. 105-164.4 except the tax does 18
not apply to the sales price of an item taxable under G.S. 105-164.4(a)(1a). 19
(2) through (4) Repealed by Session Laws 2011 -330, s. 45, effective June 27, 20
2011. 21
(5) The sales price of food that is not otherwise exempt from tax pursuan t to 22
G.S. 105-164.13 but is exempt from the State sales and use tax pursuant to 23
G.S. 105-164.13B. 24
(5a) The sales price of a bundled transaction that includes food subject to tax under 25
subdivision (5) of this subsection, if the price of the food exceeds ten percent 26
(10%) of the price of the bundle. A retailer must determine the price of food 27
in a bundled transaction in accordance with G.S. 105-164.4D. 28
(5b) Repealed by Session Laws 2013-3.4(c), effective July 1, 2014, and applicable 29
to purchases made on or after that date. 30
(6), (7) Repealed by Session Laws 2011-330, s. 45, effective June 27, 2011. 31
(8) The presumed sales price of an item of tangible personal property under 32
G.S. 105-164.12B. 33
General Assembly Of North Carolina Session 2025
Page 2 House Bill 1032-First Edition
(b) Exemptions and Refunds. – The State exemptions and exclusions contained in Article 1
5 of Subchapter I of this Chapter, except for the exemption for food in G.S. 105-164.13B, Chapter 2
apply to the local sales and use tax authorized to be levied and imposed under this Article. The 3
State refund provisions contained in G.S. 105-164.14 and G.S. 105-164.14A apply to the local 4
sales and use tax authorized to be levied and imposed under this Article. A refund of an excessive 5
or erroneous State sales tax collection allowed under G.S. 105-164.11 and a refund of State sales 6
tax paid on a rescinded sale or cancelled service contract under G.S. 105-164.11A apply to the 7
local sales and use tax authorized to be levied and imposed under this Article. The aggregate 8
annual local refund amount allowed an entity under G.S. 105-164.14(b) for the State's fiscal year 9
may not exceed thirteen million three hundred thousand dollars ($13,300,000). 10
…." 11
SECTION 3. G.S. 105-469 reads as rewritten: 12
"§ 105-469. Secretary to collect and administer local sales and use tax. 13
(a) The Secretary shall collect and administer a tax levied by a county pursuant to this 14
Article. As directed by G.S. 105-164.13B, taxes levied by a county on food are administered as 15
if they were levied by the State under Article 5 of this Chapter. The references in this section to 16
Article 39 of this Chapter and Chapter 1096 of the 1967 Session Laws and Articles 40 and 42 of 17
this Chapter do not include the adjustments made pursuant to G.S. 105-524. The Secretary must, 18
on a monthly basis, distribute local taxes levied on food to the taxing counties as follows: 19
(1) The Secretary must allocate one-half of the net proceeds on a per capita basis 20
according to the most recent annual population estimates certified to the 21
Secretary by the State Budget Officer. The Secretary must then adjust the 22
amount allocated to each county as provided in G.S. 105 -486(b). The 23
Secretary must include one-half of the amount allocated under this subdivision 24
in the distribution made under Article 40 of this Chapter and must include the 25
remaining one-half in the distribution made under Article 42 of this Chapter. 26
(2) The Secretary must allocate the remaining net proceeds proportionately to 27
each taxing county based upon the amount of sales tax on food collected in 28
the taxing county in the 1997-1998 fiscal year under Article 39 of this Chapter 29
or under Chapter 1096 of the 1967 Session Laws relative to the total amount 30
of sales tax on food collected in all taxing counties in the 1997 -1998 fiscal 31
year under Article 39 of this Chapter and under Chapter 1096 of the 1967 32
Session Laws. The Secretary must include the amount allocated under this 33
subdivision in the distribution made under Article 39 of this Chapter. 34
(b) The Secretary shall require retailers who collect use tax on sales to North Carolina 35
residents to ascertain the county of residence of each buyer and provide that information to the 36
Secretary along with any other information necessary for the Secretary to allocate the use tax 37
proceeds to the correct taxing county." 38
SECTION 4. G.S. 105-506.2 reads as rewritten: 39
"§ 105-506.2. Exemption of food. 40
A tax levied under this Article does not apply to the sales price of food that is exempt from 41
tax pursuant to G.S. 105-164.13B or to the sales price of a bundled transaction taxable pursuant 42
to G.S. 105-467(a)(5a).G.S. 105-164.13B." 43
SECTION 5. G.S. 105-538 reads as rewritten: 44
"§ 105-538. Administration of taxes. 45
… 46
Except as provided in this Article, the adoption, levy, collection, administration, and repeal 47
of these additional taxes must be in accordance with Article 39 of th is Chapter. G.S. 105-468.1 48
is an administrative provision that applies to this Article. A tax levied under this Article does not 49
apply to the sales price of food that is exempt from tax pursuant to G.S. 105-164.13B or to the 50
sales price of a bundled transaction taxable pursuant to G.S. 105-467(a)(5a). G.S. 105-164.13B. 51
General Assembly Of North Carolina Session 2025
House Bill 1032-First Edition Page 3
The Secretary shall not divide the amount allocated to a county between the county and the 1
municipalities within the county." 2
SECTION 6. Section 9 of Chapter 1096 of the 1967 Session Laws, as amended by 3
Section 2 of Chapter 12 of the 1979 Session Laws, Section 3 of Chapter 4 of the 1981 Session 4
Laws, Section 13(e) of S.L. 2001-427, Section 45.11(c) of S.L. 2003-284, Section 27(b) of S.L. 5
2003-416, and Section 19 of S.L. 2009-445, reads as rewritten: 6
"Sec. 9. Distribution. The Secretary of Revenue must divide the net proceeds of the tax 7
collected under this division on items other than food to Mecklenburg County and its 8
municipalities in ac cordance with the ad valorem distribution method described in 9
G.S. 105-472(b)(2). The Secretary of Revenue must distribute the taxes levied by Mecklenburg 10
County on food to Mecklenburg County and the municipalities within Mecklenburg County in 11
accordance w ith G.S. 105-469(a). This amount shall be divided between the county and its 12
municipalities in accordance with the ad valorem distribution method described in 13
G.S. 105-472(b)(2). 14
The Secretary of Revenue must reduce the amount distributable to Mecklenburg County 15
under this section by the amount set in G.S. 105-522. This reduction does not affect the amount 16
allocated to municipalities under this section. 17
If any provision of this Act or the application thereof to any person or circumstance is held 18
invalid, such invalidity shall not affect other provisions or applications of the Act which can be 19
given effect without the invalid provision or application, and to this end the provisions of this 20
Act are declared to be severable." 21
SECTION 7. G.S. 105-164.13B(b) is repealed. 22
SECTION 8. This act becomes effective October 1, 2026, and applies to sales made 23
on or after that date. 24