Which food and beverage sales by a deli are subject to sales tax?

Delicatessens usually make more than 75 percent of their food sales in prepared food. If your prepared food sales are greater than 75 percent of your total food sales, then you are required to collect sales tax on your total food sales except for sales of packages containing four or more servings. Prepared food includes heated foods, combined foods (two or more ingredients), or foods sold with utensils provided by the seller.

Delicatessens offer a variety of food and beverages for sale. Some foods are “prepared food” such as sandwiches, soups or salads and are generally subject to sales tax. However, nontaxable grocery type foods such as canned or prepackaged food, baked goods, and meats and cheeses are also sold by delis.  Combination businesses that meet the 75 percent prepared food threshold are not allowed to segregate their sales and must charge sales tax on all food sales, except foods falling within the four or more servings exception, or foods that qualify for purchase under the Federal Food Stamp Act. (See combination business section and 75 percent prepared food threshold).

If you do not collect sales tax on all your food sales, you must prove that your prepared food sales are below the 75 percent threshold or you will be liable for any uncollected sales tax on your total food sales.


Establishments that do not meet the 75 percent prepared food threshold must collect sales tax on the following:

  • Any food or beverage sold with or in a cup, plate, napkin, fork, spoon, bowl, etc.
  • Any food or beverage sold hot, except bakery items.
  • Any food or beverage where the seller has combined two or more ingredients – unless the seller merely cut, repackaged or pasteurized the food items (sliced meats and cheeses). The seller sells the item unheated and by weight or volume as a single item (salads). The food is raw meat, fish, poultry or eggs, or contains any of these raw ingredients and recommended by the FDA to be cooked.


Establishments that do not meet the 75 percent prepared food threshold may sell the following types of food products tax exempt:

  • Fresh fruit/vegetables
  • Bakery items sold without a utensil
  • Other bottled or canned beverages containing over 50 percent fruit or vegetable juice, or milk, milk product or milk substitute
  • Canned goods
  • Prepackaged food (packaged by the manufacturer)


Exception for four or more servings.

Food or food ingredients packaged for sale as a single item containing four servings or more (e.g., ground coffee, whole cakes, loaves of bread) and sold for a single price are not subject to sales tax, even if the business exceeds the threshold. However, if the seller’s customary practice is to physically hand or otherwise deliver a utensil to the customer as part of these sales transactions, then sales tax will apply. The number of servings in a package of food or food ingredients is determined by the manufacturer’s label. If no label is available, you must reasonably determine the number of servings.


Calculating for multiple locations

If you have multiple locations, you may calculate a separate percentage of prepared food sales for each location or one overall percentage of sales figures from all locations in the state. You can use the prior fiscal year or calendar year’s sales figures. Once you choose a method of calculation, you must continue to use that method for future calculations unless written consent is received from the Department of Revenue to change methods.


Additional information

More information is available at the DOR website at dor.wa.gov/food, including:

  • Prepared food calculator
  • Restaurant and retailers of prepared food guide
  • Food and food ingredients



RCW 82.08.0293WAC 458-20-124WAC 458-20-11WAC 458-20-244


Rev. 1/2/18

This article is an excerpt from the Handbook for Excellent Restaurant Operations (HERO), published by the Washington Hospitality Association.  Want a hard copy of the whole manual?  It’s one of the many benefits of becoming a member!  Find out more about joining the Washinton Hospitality Association here.

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