Prepared Foods Sales Tax Modification.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 1065

Short Title: Prepared Foods Sales Tax Modification. (Public)
Sponsors: Representatives Alston, Ager, and Longest (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Finance, if favorable, Rules, Calendar, and Operations of the House
April 29, 2026
*H1065-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO EXEMPT CERTAIN PREPARED FOODS FROM THE STATE SALES TAX. 2
The General Assembly of North Carolina enacts: 3
SECTION 1.(a) G.S. 105-164.4L reads as rewritten: 4
"§ 105-164.4L. Prepared food. 5
(a) Prepared Food Definition. – The term "prepared food" means food that meets at least 6
one of the following conditions: 7
(1) It is sold in a heated state, or it is heated by the retailer. 8
(2) It consists of two or more foods mixed or combined by the retailer for sale as 9
a single item. This does not include: 10
a. Food containing raw eggs, fish, meat, or poultry that requires cooking 11
by the consumer as recommended by the Food and Drug 12
Administration in chapter 3, part 401.11 of its Food Code so as to 13
prevent foodborne illnesses. 14
b. Food that is only sliced, repackaged, or pasteurized by the retailer. 15
c. Food sold without eating utensils by a retailer whose primary business 16
is food manufacturing as classified in NAICS Sector 311, provided the 17
food is sold in a sealed, shelf-stable container that includes a "Nutrition 18
Facts" panel as required by the federal Food, Drug and Cosmetic Act, 19
21 U.S.C. § 301, et seq. 20
…." 21
SECTION 1.(b) G.S. 105-164.13B reads as rewritten: 22
"§ 105-164.13B. Food exempt from tax. 23
(a) State Exemption. – Food is exempt from the taxes imposed by this Article unless the 24
food is included in one of the subdivisions in this subsection. The following food items are 25
subject to tax: 26
(1) Repealed by Session Laws 2005-276, s. 33.10, effective October 1, 2005. 27
(2) Dietary supplements. 28
(3) Food sold through a vending machine. 29
(4) Prepared food, other than (i) bakery items sold without eating utensils by an 30
artisan bakery. bakery and (ii) food excluded from the definition of prepared 31
food under G.S. 105-164.4L(a)(2)c. The term "bakery item" includes bread, 32
rolls, buns, biscuits, bagels, croissants, pastries, donuts, danish, cakes, tortes, 33
pies, tarts, muffins, bars, cookies, and tortillas. An artisan bakery is a bakery 34
that meets all of the following requirements: 35
General Assembly Of North Carolina Session 2025
Page 2 House Bill 1065-First Edition
a. It derives over eighty percent (80%) of its gross receipts from bakery 1
items. 2
b. Its annual gross receipts, combined with the gross receipts of all 3
related persons, do not exceed one million eight hundred thousand 4
dollars ($1,800,000). For purposes of this subdivision, the term 5
"related person" means a person described in one of the relationships 6
set forth in section 267(b) or 707(b) of the Code. 7
(5) Soft drinks. 8
(6) Repealed by Session Laws 2003-284, s. 45.6B, effective January 1, 2004. 9
(7) Candy. 10
…." 11
SECTION 2. This act becomes effective October 1, 2026, and applies to sales made 12
on or after that date. 13