Prepared food sales tax

AN ACT Relating to exempting prepared food from sales tax; 1
amending RCW 82.08.0293; and creating a new section.2
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:3
Sec. 1. RCW 82.08.0293 and 2022 c 16 s 152 are each amended to 4
read as follows: 5
(1) The tax levied by RCW 82.08.020 does not apply to sales of 6
food and food ingredients. "Food and food ingredients" means 7
substances, whether in liquid, concentrated, solid, frozen, dried, or 8
dehydrated form, that are sold for ingestion or chewing by humans and 9
are consumed for their taste or nutritional value. "Food and food 10
ingredients" includes prepared food. "Food and food ingredients" does 11
not include: 12
(a) "Alcoholic beverages," which means beverages that are 13
suitable for human consumption and contain ((one-half of one )) 0.5 14
percent or more of alcohol by volume; 15
(b) "Tobacco," which means cigarettes, cigars, chewing or pipe 16
tobacco, or any other item that contains tobacco; and17
(c) Cannabis, useable cannabis, or cannabis-infused products.18
(2) The exemption of "food and food ingredients" provided for in 19
subsection (1) of this section does not apply to ((prepared food, )) 20
soft drinks, bottled water, or dietary supplements. The definitions 21
H-0300.1
HOUSE BILL 1340
State of Washington 69th Legislature 2025 Regular Session
By Representatives Manjarrez, Connors, Jacobsen, Couture, Klicker,
Shavers, Marshall, Barkis, Barnard, and Schmidt
Read first time 01/16/25. Referred to Committee on Finance.
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in this subsection apply throughout this section unless the context 1
clearly requires otherwise. 2
(a) "Bottled water" means water that is placed in a safety sealed 3
container or package for human consumption. Bottled water is calorie 4
free and does not contain sweeteners or other additives except that 5
it may contain: (i) Antimicrobial agents; (ii) fluoride; (iii) 6
carbonation; (iv) vitamins, minerals, and electrolytes; (v) oxygen; 7
(vi) preservatives; and (vii) only those flavors, extracts, or 8
essences derived from a spice or fruit. "Bottled water" includes 9
water that is delivered to the buyer in a reusable container that is 10
not sold with the water. 11
(b) "Dietary supplement" means any product, other than tobacco, 12
intended to supplement the diet that: 13
(i) Contains one or more of the following dietary ingredients:14
(A) A vitamin; 15
(B) A mineral; 16
(C) An herb or other botanical; 17
(D) An amino acid; 18
(E) A dietary substance for use by humans to supplement the diet 19
by increasing the total dietary intake; or 20
(F) A concentrate, metabolite, constituent, extract, or 21
combination of any ingredient described in this subsection;22
(ii) Is intended for ingestion in tablet, capsule, powder, 23
softgel, gelcap, or liquid form, or if not intended for ingestion in 24
such form, is not represented as conventional food and is not 25
represented for use as a sole item of a meal or of the diet; and26
(iii) Is required to be labeled as a dietary supplement, 27
identifiable by the "supplement facts" box found on the label as 28
required pursuant to 21 C.F.R. Sec. 101.36, as amended or renumbered 29
as of January 1, 2003. 30
(c)(i) "Prepared food" means: 31
(A) Food sold in a heated state or heated by the seller;32
(B) Food sold with eating utensils provided by the seller, 33
including plates, knives, forks, spoons, glasses, cups, napkins, or 34
straws. A plate does not include a container or packaging used to 35
transport the food; or 36
(C) Two or more food ingredients mixed or combined by the seller 37
for sale as a single item, except: 38
(I) Food that is only cut, repackaged, or pasteurized by the 39
seller; or 40
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(II) Raw eggs, fish, meat, poultry, and foods containing these 1
raw animal foods requiring cooking by the consumer as recommended by 2
the federal food and drug administration in chapter 3, part 401.11 of 3
the food code, published by the food and drug administration, as 4
amended or renumbered as of January 1, 2003, so as to prevent 5
foodborne illness. 6
(ii) Food is "sold with eating utensils provided by the seller" 7
if: 8
(A) The seller's customary practice for that item is to 9
physically deliver or hand a utensil to the customer with the food or 10
food ingredient as part of the sales transaction. If the food or food 11
ingredient is prepackaged with a utensil, the seller is considered to 12
have physically delivered a utensil to the customer unless the food 13
and utensil are prepackaged together by a food manufacturer 14
classified under sector 311 of the North American industry 15
classification system (NAICS); 16
(B) A plate, glass, cup, or bowl is necessary to receive the food 17
or food ingredient, and the seller makes those utensils available to 18
its customers; or 19
(C)(I) The seller makes utensils available to its customers, and 20
the seller has more than ((seventy-five)) 75 percent prepared food 21
sales. For purposes of this subsection (2)(c)(ii)(C), a seller has 22
more than ((seventy-five)) 75 percent prepared food sales if the 23
seller's gross retail sales of prepared food under (c)(i)(A), 24
(c)(i)(C), and (c)(ii)(B) of this subsection equal more than 25
((seventy-five)) 75 percent of the seller's gross retail sales of all 26
food and food ingredients, including prepared food, soft drinks, and 27
dietary supplements. 28
(II) However, even if a seller has more than ((seventy-five)) 75 29
percent prepared food sales, four servings or more of food or food 30
ingredients packaged for sale as a single item and sold for a single 31
price are not "sold with utensils provided by the seller" unless the 32
seller's customary practice for the package is to physically hand or 33
otherwise deliver a utensil to the customer as part of the sales 34
transaction. Whenever available, the number of servings included in a 35
package of food or food ingredients must be determined based on the 36
manufacturer's product label. If no label is available, the seller 37
must reasonably determine the number of servings. 38
(III) The seller must determine a single prepared food sales 39
percentage annually for all the seller's establishments in the state 40
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based on the prior year of sales. The seller may elect to determine 1
its prepared food sales percentage based either on the prior calendar 2
year or on the prior fiscal year. A seller may not change its elected 3
method for determining its prepared food percentage without the 4
written consent of the department. The seller must determine its 5
annual prepared food sales percentage as soon as possible after 6
accounting records are available, but in no event later than 7
((ninety)) 90 days after the beginning of the seller's calendar or 8
fiscal year. A seller may make a good faith estimate of its first 9
annual prepared food sales percentage if the seller's records for the 10
prior year are not sufficient to allow the seller to calculate the 11
prepared food sales percentage. The seller must adjust its good faith 12
estimate prospectively if its relative sales of prepared foods in the 13
first ((ninety)) 90 days of operation materially depart from the 14
seller's estimate. 15
(iii) "Prepared food" ((does not )) includes the following 16
items((, if sold without eating utensils provided by the seller)):17
(A) Food sold by a seller whose proper primary NAICS 18
classification is manufacturing in sector 311, except subsector 3118 19
(bakeries), as provided in the "North American industry 20
classification system— United States, 2002"; 21
(B) Food sold in an unheated state by weight or volume as a 22
single item; or 23
(C) Bakery items. The term "bakery items" includes bread, rolls, 24
buns, biscuits, bagels, croissants, pastries, donuts, Danish, cakes, 25
tortes, pies, tarts, muffins, bars, cookies, or tortillas.26
(d) "Soft drinks" means nonalcoholic beverages that contain 27
natural or artificial sweeteners. Soft drinks do not include 28
beverages that contain: Milk or milk products; soy, rice, or similar 29
milk substitutes; or greater than ((fifty)) 50 percent of vegetable 30
or fruit juice by volume. 31
(3) Notwithstanding anything in this section to the contrary, the 32
exemption of "food and food ingredients" provided in this section 33
applies to food and food ingredients that are furnished, prepared, or 34
served as meals: 35
(a) Under a state administered nutrition program for the aged as 36
provided for in the older Americans act (P.L. 95-478 Title III) and 37
RCW 74.38.040(6); 38
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(b) That are provided to senior citizens, individuals with 1
disabilities, or low-income persons by a nonprofit organization 2
organized under chapter 24.03A or 24.12 RCW; or 3
(c) That are provided to residents, ((sixty-two)) 62 years of age 4
or older, of a qualified low-income senior housing facility by the 5
lessor or operator of the facility. The sale of a meal that is billed 6
to both spouses of a marital community or both domestic partners of a 7
domestic partnership meets the age requirement in this subsection 8
(3)(c) if at least one of the spouses or domestic partners is at 9
least ((sixty-two)) 62 years of age. For purposes of this subsection, 10
"qualified low-income senior housing facility" means a facility:11
(i) That meets the definition of a qualified low-income housing 12
project under 26 U.S.C. Sec. 42 of the federal internal revenue code, 13
as existing on August 1, 2009; 14
(ii) That has been partially funded under 42 U.S.C. Sec. 1485; 15
and 16
(iii) For which the lessor or operator has at any time been 17
entitled to claim a federal income tax credit under 26 U.S.C. Sec. 42 18
of the federal internal revenue code. 19
(4)(a) Subsection (1) of this section notwithstanding, the retail 20
sale of food and food ingredients is subject to sales tax under RCW 21
82.08.020 if the food and food ingredients are sold through a vending 22
machine. Except as provided in (b) of this subsection, the selling 23
price of food and food ingredients sold through a vending machine for 24
purposes of RCW 82.08.020 is ((fifty-seven)) 57 percent of the gross 25
receipts. 26
(b) For soft drinks, bottled water, and hot prepared food and 27
food ingredients, other than food and food ingredients which are 28
heated after they have been dispensed from the vending machine, the 29
selling price is the total gross receipts of such sales divided by 30
the sum of one plus the sales tax rate expressed as a decimal.31
(c) For tax collected under this subsection (4), the requirements 32
that the tax be collected from the buyer and that the amount of tax 33
be stated as a separate item are waived. 34
NEW SECTION. Sec. 2. RCW 82.32.805 and 82.32.808 do not apply 35
to this act.36
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