Ohio Sales Tax on Restaurant and Grocery Orders: Dine-In, Carryout and Delivery

This is general information from Ohio's published law and guidance, not tax advice. Confirm your own situation with the Ohio Department of Taxation or your accountant.

Ohio taxes food differently from most states. The short version: In Ohio, food sold to be eaten off the premises (groceries, carryout and delivery) is exempt from sales tax. Food eaten on the premises is taxable at the 5.75% state rate plus your county's rate, and soft drinks and alcohol are taxable either way.

Where this comes from

Ohio's sales tax law exempts "sales of food for human consumption off the premises where sold" (R.C. 5739.02(B)(2)), and the state rate is 5.75%, with county rates on top. The Ohio Constitution (Article XII, Section 3) prohibits the state from taxing food sold for consumption off the premises, which is why this only changes by statewide vote.

The Department of Taxation's Information Release ST 2012-01 for restaurants (revised August 2014) puts it plainly: food sold for consumption on the premises is taxable, food sold to be consumed off the premises is not, and soft drinks are always taxable.

Dine-in vs carryout

The question that decides it is "for here or to go?" The Department's guidance says to ask, even if you only have two tables. A few cases from the same release:

• Food courts: the shared seating counts as your premises, so food eaten there is taxable.
• Food trucks: if you provide seating, on-premises rules apply.
• Drive-through: you don't have to ask, but your records must keep drive-through sales separate.
• A "to go" customer who sits down: you're not required to go and collect tax.

Soft drinks and other items

Ohio's definition of food excludes alcoholic beverages, dietary supplements, soft drinks and tobacco. Soft drinks, meaning sweetened non-alcoholic drinks that don't contain milk or a milk substitute and are less than half fruit or vegetable juice, are taxable whether they're consumed on or off the premises. So a carryout order of a burger and a soda: the burger is exempt, the soda is taxed.

Online orders and delivery fees

Online pickup and delivery orders are off-premises sales, so the food is exempt and soft drinks and alcohol are taxed. Delivery charges are less obvious. Ohio's rule on delivery charges (OAC 5703-9-52) treats a vendor's delivery charge as part of the price, and for a delivery with both taxable and exempt items, the vendor should split the charge by sales price or weight and tax the taxable share. If you don't split it and any part of the order is taxable, the whole delivery charge is taxed. Charges a customer pays to a separate delivery company, which you don't collect, aren't taxable to you.

How that applies to a delivery made up only of exempt food isn't spelled out in one sentence, so ask the Department or your accountant before you set it up.

Grocery stores

Most grocery food is sold for consumption off the premises, so it's exempt. The items to watch are the same: soft drinks, alcohol, tobacco and non-food items like paper goods and cleaning products are taxable. A deli with a seating area has dine-in sales too.

Getting it right in your POS

Set the tax on each item, not on the whole order, so a mixed basket is taxed correctly. Keep dine-in and to-go sales separate in your records. In ScomsPOS, tax is set per item, so online orders and counter sales follow the same rules. See online ordering for Ohio restaurants and grocery stores.