|(a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Bakery items--Baked goods typically made by bakeries
including bread, rolls, buns, biscuits, bagels, croissants, pastries,
doughnuts, Danishes, cakes, tortes, pies, tarts, muffins, lemon squares,
cookies, large pretzels, and tortillas. The term does not include
candy, snack items, sandwiches, tacos, or pizzas.
(2) Bulk vending machine--A device that contains unsorted
items and randomly dispenses goods in approximately equal amounts
without selection of a particular item or type of item by the customer.
(3) Candy--A confection made with natural or artificial
sweeteners. Examples include: candy bars; gum; drops; taffy; nuts,
raisins, and fruits that have been candied, crystalized, glazed, or
coated with chocolate, yogurt, or caramel; and nuts roasted with a
sweetener. The term does not include products used exclusively for
cooking, such as chocolate bits and cake sprinkles.
(4) Combine--To join two or more food products into
a single item.
(5) Eating utensils--Eating utensils include trays,
plates, knives, forks, spoons, glasses, cups, or straws.
(6) Food and food ingredients--Substances, whether
in liquid, concentrated, solid, frozen, dried, or dehydrated form,
that are sold for ingestion or chewing by humans and are consumed
for taste, aroma, or nutritional value.
(A) Food and food ingredients include food products
intended for human consumption, such as the following: cereal and
cereal products; milk and milk products, butter, and yogurt; oleomargarine;
meat and meat products; poultry and poultry products; fish and fish
products; eggs and egg products; vegetables and vegetable products;
fruit and fruit products; spices, condiments, and salt; sugar products;
coffee and coffee substitutes; tea; juice (if more than 50% fruit
or vegetable juice by volume); cocoa and cocoa products; canned foods;
snack items; or any combination of these.
(B) Food products do not include:
(i) alcoholic beverages;
(ii) cigarettes, tobacco, or tobacco products;
(v) water; or
(vi) drugs, medicines, tonics, vitamins, dietary supplements,
and medicinal preparations in any form. For further information about
drugs, medicines, and dietary supplements, see §3.284 of this
title (relating to Drugs, Medicines, Medical Equipment and Devices).
(7) Food ready for immediate consumption--Food, drinks,
or meals prepared, served, or sold by restaurants, lunch counters,
hotels, cafeterias, delis, mobile vendors, or other like places of
business, that, when sold, require no further preparation by the purchaser
prior to consumption; and food sold through vending machines. A grocery
store or convenience store that contains a restaurant, lunch counter,
deli, or other similar location is a like place of business selling
food ready for immediate consumption, but only for items sold at that
(8) Food sold through vending machines--Food dispensed
from a machine or other mechanical device that accepts payment.
(9) Mix--To blend two or more food items together into
a single item that is more or less a uniform whole, but each ingredient
may or may not retain its identity (e.g., potato salad, coleslaw or
(10) Mobile vendor--A person who sells food from a
motor vehicle, push cart, or any other form of vehicle.
(11) Prepared food--Prepared food means:
(A) food ready for immediate consumption;
(B) food sold in a heated state or heated by the seller;
(C) food sold with eating utensils provided by the
(D) two or more food ingredients mixed or combined
by the seller for sale as a single item, including items that are
sold by weight or volume as a single item, but does not include food
that is prepared at an off-site location, refrigerated food that is
typically reheated prior to eating, or food that is only cut, repackaged,
or pasteurized by the seller.
(12) Retirement facility--A facility that provides
permanent housing and residence to individuals, a majority of whom
are 60 years of age or older.
(13) Snack items--Snack items means:
(A) breakfast bars, granola bars, nutrition bars, sports
bars, protein bars, and yogurt bars, unless they are labeled and marketed
(B) snack mix and trail mix;
(C) nuts, but not including pine nuts or nuts that
have been candied, crystalized, glazed, coated with chocolate, yogurt,
or caramel, or roasted with a sweetener;
(E) chips, crackers, hard pretzels, pork rinds, and
(F) sunflower seeds and pumpkin seeds;
(G) ice cream, sherbert, and frozen yogurt; and
(H) ice pops, juice pops, sorbet, and other frozen
fruit items containing not more than 50 percent fruit juice by volume.
(14) Soft drinks--Carbonated and non-carbonated non-alcoholic
beverages that contain natural or artificial sweeteners. The term
does not include beverages that contain milk or milk products, soy,
rice, or similar milk substitutes, or juices that contain more than
50% vegetable or fruit juice by volume.
(b) Sales of exempt food products or water. Food and
food ingredients are exempt from sales tax unless otherwise taxable
under subsection (c) of this section. Water is exempt as explained
in §3.318 of this title (relating to Water-Related Exemptions).
Heated and unheated bakery items are exempt regardless of size or
quantity unless sold with plates or other eating utensils provided
by the seller. Separately stated charges for bakery items sold by
caterers, mobile vendors, or restaurants, fast food outlets, lunch
counters, cafeterias, delis, hotels, and other like places of business,
are taxable if sold in conjunction with taxable meals for which plates
or other eating utensils are provided. For example, a roll served
in a restaurant with a meal is taxable even if the roll is served
rolled up in a napkin rather than directly on the plate. The restaurant
is not required to collect sales tax on bakery items purchased without
eating utensils from its bakery.
(c) Taxable sales. The following are subject to sales
(1) sales of soft drinks;
(2) sales of candy;
(3) sales of ice;
(4) sales of beer, wine, and other alcoholic beverages
unless subject to mixed beverage gross receipts tax and mixed beverage
sales tax under Tax Code, Chapter 183;
(5) sales of cigarettes and other tobacco products;
(6) vending machine sales of food, soft drinks, and
candy as explained in subsection (d) of this section;
(7) sales of prepared food as defined in subsection
(a)(11) of this section, including:
(A) all food ready for immediate consumption, except
bakery items, sold by caterers, mobile vendors, or restaurants, fast
food outlets, lunch counters, cafeterias, delis, hotels, and other
like places of businesses; and
(B) all sandwiches ready for immediate consumption,
including refrigerated triangle-type sandwiches such as ham, cheese,
tuna, egg salad, or chicken salad, but not sales of sandwiches that
are frozen or partially frozen and that require thawing or heating
by the customer prior to consumption;
(8) sales of bakery items sold with plates or other
eating utensils provided by the seller; and
(9) sales of snack items sold in individual-sized portions.
(A) A snack item is sold in an individual sized-portion
if the snack item:
(i) is labeled as having not more than one serving;
(ii) contains less than 2.5 ounces.
(B) Snack items do not include items sold in prepackaged
units containing more than one package. For example, a box containing
6 prepacked, single-serving bags of nuts is not a snack item.
(d) Vending machine sales. Except as provided in subsection
(e) of this section, food, candy, and soft drinks sold through vending
machines are taxable. The sales tax is determined as follows:
(1) Soft drink and candy vending machine sales. The
vending machine operator must remit sales tax on the total gross receipts
from sales of soft drinks and candy without any deduction for spoilage,
waste, or other losses.
(2) Food product vending machine sales. The vending
machine operator must remit sales tax on 50% of the total gross receipts
from sales of food products without any deduction for spoilage, waste,
or other losses. Examples of food products include snack items, milk,
tea, coffee, and juice if more than 50% vegetable or fruit juice by
(3) Water, including bottled water, spring water, sparkling
water, or mineral water, is exempt from sales tax. A vending machine
operator is not required to remit sales tax on the receipts from sales
of water. Flavored water (carbonated or non-carbonated) is a soft
drink and a vending machine operator must remit tax on the total gross
receipts for vending machines sales of flavored water.
(4) A vending machine operator must place a sign on
the vending machine stating that the vended price includes sales tax.
If sales tax is included in the price of the taxable item, the vending
machine operator may back out the amount of the tax before reporting
the taxable sales on the sales tax return. See §3.328 of this
title (relating to Optional Reporting Methods for Grocers and Other
(e) Exempt vending machine sales.
(1) Bulk vending machine sales. Food, gum, candy, and
toys sold for $0.50 or less from a bulk vending machine, as defined
in subsection (a)(2) of this section, are exempt from sales tax. A
bulk vending machine operator that has only exempt bulk vending machine
sales may choose to obtain a sales tax permit and file sales tax returns
so that the operator is able to purchase the gum, candy, or toys tax
free for resale by giving the supplier a properly completed resale
certificate. If a vending machine operator has both taxable vending
machine receipts as explained in subsection (d) of this section, and
exempt bulk vending machine sales as explained in this subsection,
the operator must keep detailed records showing which items are dispensed
from the bulk vending machines.
(2) Sales through vending machines operated by certain
(A) The sale of tangible personal property through
a vending machine is exempt from the taxes imposed by this chapter
(i) the sale is made by a nonprofit organization that
is exempt from federal income taxation under Section 501(a), Internal
Revenue Code of 1986, by being listed as an exempt organization in
Section 501(c)(3) of that code;
(ii) the machine is owned by the nonprofit organization;
(iii) the machine is stocked and maintained by individuals
with special needs as part of an independent life skills and education
program operated by the nonprofit organization.
(B) A nonprofit organization that makes a sale exempt
from taxation under this section must maintain records demonstrating
that the sale is eligible for the exemption.
(f) Food stamp purchases. Food, candy, snack items,
and soft drinks are exempt if purchased with food stamps (including
a Texas Lone Star debit card) under the food stamp program (7 U.S.C.
Chapter 51) if the item can legally be purchased with food stamps.
A seller should apply the amount of food stamps against the purchase
of qualifying taxable items first so that the individual receives
the best possible benefit from the food stamp exemption.
(g) Food sale exemptions. Certain organizations may
sell prepared food, candy, snack items, and soft drinks tax-free.
These tax-free sales are not counted against the two one-day, tax-free
sales allowed to certain exempt nonprofit organizations under §3.322
of this title (relating to Exempt Organizations). Tax is due on sales
of alcoholic beverages.
(1) Sales of food, prepared food, soft drinks, snack
items, or candy by a church or at a function of the church are exempt.
(2) Sales of food, prepared food, soft drinks, snack
items, or candy sold or served by public or private elementary or
secondary schools, school districts, bona fide student organizations,
booster club or other school support organization, or parent-teacher
organizations and associations are exempt if the items are sold or
served during a regular school day pursuant to an agreement with the
proper school authorities. This exemption includes food, soft drinks,
snack items, and candy sold through vending machines.
(3) Sales of food, prepared food, soft drinks, snack
items, or candy by a parent-teacher organization or association during
a fund-raising sale are exempt if the proceeds do not go to the benefit
of an individual.
(4) Sales of food, prepared food, soft drinks, snack
items, or candy by a group associated with a private or public elementary
or secondary school are exempt if the sale is part of a fund-raising
drive sponsored by the organization for its exclusive use.