Most groceries in Indiana are not taxed. The state’s 7% sales tax applies to retail purchases generally, but food and food ingredients bought for home consumption are exempt.1Indiana General Assembly. Indiana Code 6-2.5-5-20 – Food and Food Ingredients for Human Consumption Several categories you’ll find on grocery shelves are carved out of that exemption, so the line between taxed and untaxed is not always where you’d expect.
What Counts as Tax-Free Food
The exemption covers what Indiana calls “food and food ingredients,” meaning anything sold for human consumption and valued for its taste or nutritional content. That takes in the staples: fresh produce, raw meat, poultry, fish, eggs, dairy, bread, cereal, rice, pasta, canned goods, and frozen items you’ll cook at home.2Indiana Department of Revenue. Sales Tax Information Bulletin 29
Two conditions apply. The food must be sold unheated, and the seller must not provide eating utensils (forks, spoons, plates, cups, straws) with the purchase. Meet both, and the item is exempt.1Indiana General Assembly. Indiana Code 6-2.5-5-20 – Food and Food Ingredients for Human Consumption
What Gets Taxed at 7%
Five categories of grocery-store items carry the full 7% tax.2Indiana Department of Revenue. Sales Tax Information Bulletin 29
Candy
Indiana defines candy as a sweetened preparation made with sugar, honey, or artificial sweeteners combined with ingredients like chocolate, fruits, or nuts, shaped into bars, drops, or pieces. A chocolate bar and a bag of gummy bears both qualify. One detail catches people off guard: if flour appears on the ingredient label, the item is not candy for tax purposes, and it’s exempt. A Kit Kat is tax-free (the wafer contains flour); a plain Hershey bar is taxable. Anything that requires refrigeration also falls outside the candy definition.2Indiana Department of Revenue. Sales Tax Information Bulletin 29
Soft Drinks
Any sweetened nonalcoholic beverage counts as a taxable soft drink, whether the sweetener is natural or artificial. Soda, sweetened iced tea, energy drinks, and lemonade all qualify. The definition has two carve-outs: drinks containing milk or milk substitutes (soy, rice) are excluded, and so are beverages made up of more than 50% fruit or vegetable juice by volume.3Indiana General Assembly. Indiana Code 6-2.5-1-26 – Soft Drinks A bottle of 100% orange juice is exempt; a fruit punch that’s mostly water and sugar is taxed.
Prepared Food
Food is “prepared” and taxable under any of three conditions: it’s sold heated, the seller provides utensils, or the seller mixed or combined two or more ingredients into a single item for sale. Hot deli chicken, a soup from the food bar, and a made-to-order sandwich all qualify. Cutting, repackaging, or pasteurizing doesn’t count as combining, so those steps alone don’t make food taxable.1Indiana General Assembly. Indiana Code 6-2.5-5-20 – Food and Food Ingredients for Human Consumption
Dietary Supplements
Vitamins, minerals, herbal capsules, protein powders, and similar items are taxable when the label carries a “Supplement Facts” panel. The label is the dividing line. A protein bar with a “Nutrition Facts” label is treated as food and may be exempt; a protein powder with a “Supplement Facts” label is a dietary supplement and taxed at 7%.2Indiana Department of Revenue. Sales Tax Information Bulletin 29
Alcohol and Tobacco
Alcoholic beverages and tobacco products are always taxable. They are explicitly excluded from the definition of food and food ingredients, so the grocery exemption never reaches them.1Indiana General Assembly. Indiana Code 6-2.5-5-20 – Food and Food Ingredients for Human Consumption
Bakery Items Are Tax-Free
Bakery goods get favorable treatment. Bread, rolls, bagels, croissants, donuts, muffins, cookies, cakes, pies, and tortillas are specifically excluded from the “prepared food” category, even though the baker combined ingredients to make them. A package of cookies from the bakery aisle or a cake from the bakery counter is exempt, so long as the store doesn’t hand you utensils with it.1Indiana General Assembly. Indiana Code 6-2.5-5-20 – Food and Food Ingredients for Human Consumption Ask for plates and forks at the counter, and the purchase becomes taxable.
Paying With SNAP or WIC
Anything you pay for with SNAP benefits is exempt from Indiana sales tax, even if the item would otherwise be taxable. That’s federal law, not a state choice: a state that tried to tax SNAP purchases would lose the program.4Office of the Law Revision Counsel. 7 USC 2013 – Establishment of Supplemental Nutrition Assistance Program WIC purchases of approved items are similarly exempt. When a bill is split between SNAP and cash, the SNAP portion is applied to taxable items first, so the most tax possible is avoided.
One Rate Statewide
Indiana does not let cities or counties add local sales taxes to the state rate, so 7% is the only sales tax you’ll see at the register anywhere in the state.5Indiana Department of Revenue. Sales Tax A gallon of milk is tax-free in Fort Wayne, Indianapolis, and Evansville alike, and a taxable candy bar costs the same 7% more everywhere.