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Every Day is a Sales-Tax Holiday at Your Farmers’ Market

Looking for a way to avoid taxes, save money, and help your community at the same time? Depending on your state and local tax codes, it may be a matter of going to your farmers’ market or at least to your own kitchen. In North Carolina, no sales tax is charged on fruits, vegetables, or eggs sold in their original form by the farmers who grew them. As food gets further and further way from the original form and from the farmer, both the cost of the food and the tax rates go up.

Note to newsletter writers and others promoting farmers' markets and healthy eating: see bottom of page for versions of this article and graphics that you can use in your publications or at your events.

What would the sales tax be in North Carolina on a cantaloupe?

• Zero at a farmers’ market or farm stand. Since you’re buying directly from the farmer, you pay no sales tax. At the State Farmers Market, cantaloupes are selling for $2 each or 3 for $5. But from the tax point of view, it really doesn't matter. Total cost per melon: $2.
• 7 cents at a popular area grocery store. Since you are buying the ingredients to make a meal yourself, the sales tax rate is 2%. In August 2009, cantaloupes at a big Raleigh grocery store cost $3.59 each. No wonder; they come from Guatemala!  Total cost per melon, $3.66.
• 46 cents at the salad bar at the same grocery. Since the grocery store cut up the melon for you, it is “prepared food,”  with a 7.75% tax rate in Wake County (6.75% state sales tax plus 1% county prepared-food tax). Melon and everything else from the salad bar costs $5.99 a pound. According to the USDA’s National Nutrient Database, you’d pay about $11.26 for a melon’s worth of fruit. Total cost per melon: $11.72.
• 52 cents at the salad bar starting September 1st with the new 1% sales-tax. That’s more than enough to buy a quarter of a melon at the farmers’ market just in sales tax alone. Total cost: $11.78 – enough to buy six melons at the farmers market.

Let’s not even think about what you’d pay to be served a little bowl of cantaloupe at a restaurant, even before you add in the tip!

The tax savings add up over time.

The menu plans at Cook for Good spend about a third of the budget on fresh, local produce. If you bought all of that at your farmers’ market instead of at a store, you’d save between $58 and  $91 a year on sales tax. If you could find a magical salad bar that costs the same amount a pound as you’d pay at the farmers’ market, you’d still spend an extra $223 to $354 because of the higher tax rate for prepared food.

Of course, that magical salad bar doesn't exist. The biggest savings, in cost and in taxes, comes from cooking. Americans spend nearly 16% of their income on food and beverages. Nearly half of that goes to the high-tax items: meals away from home and alcoholic beverages.

But wouldn't avoiding taxes hurt North Carolina during the budget crisis? No! About 45% of money spent with local businesses stays in the community, compared to only 13% at a chain store. Think of it as financial recycling: money that stays here can be taxed again.

Get other benefits, too.

Fresh food tastes better and is more nutritious. You'll be shrinking your carbon footprint by cutting back on the distance your food travels to get to your plate.

Turn a chore into fun.

Summer at the farmers’ market is like a good morning at the state fair. Watch people of all types and ages gathering delicious things to eat. Take time to taste peaches at different stands before buying a basket of your favorites. Admire colorful stacks of tomatoes, eggplants, and peppers. Meet a new vegetable for the first time.  Be dazzled by the flower stands. After all, you’re on a sales-tax holiday!

Versions of this article and graphic

Copyright 2009, Cook for Good.  Feel free to use this article to promote healthy eating, cooking, and shopping locally if you:

• Give author credit. Link back to cookforgood.com on online use or mention it for written or spoken use.
• Notify the author at cook@cookforgood.com.
• Edit for length without changing the basic message.
• Clearly mark any additions made for local relevance, such as: [Sales tax in Cumberland County is n%.]

Ideas and resources:

• Make a two-sided flyer with a 300-dpi version of the graphic and a one-page version of the article
• Use the article in your newsletter. Here's a Word version to make it easy. This longer version shows attribution for sources of statistics.
• Sales tax is complicated and this short article and flyer can't begin to address all the details, especially for meat and fish. See Understanding Sales Taxes On Agricultural Products from the North Carolina Department of Revenue.
• Update 8/19/09: the North Carolina Department of Revenue has put out a page on the increased sales tax effective 9/1/09.