LITTLE ROCK, Ark. — In recent years, fewer states have been taxing groceries, and that trend may continue as lawmakers respond to rising food prices, particularly for staples like eggs. Arkansas Governor Sarah Huckabee Sanders announced her plan to eliminate the remaining 1/8th of a cent sales tax on groceries during a news conference on Tuesday. This initiative mirrors actions in Tennessee, Mississippi, and Alabama, where lawmakers are pushing for similar grocery tax reductions.
These tax cut proposals come at a time when many states are experiencing budget uncertainties, primarily due to proposed cuts to Medicaid and various federal programs by Republican leaders in Washington. Advocates for cutting grocery taxes argue that high food prices make these changes essential right now.
Governor Sanders framed her proposal as a way to help those who are most affected by regressive taxes, stating, “We’re getting rid of Arkansas’ most regressive tax and giving a helping hand to those who need it the most.”
Over the past few years, more states have taken steps to eliminate grocery sales tax. Oklahoma and Kansas saw changes in the last year, and Virginia successfully removed its grocery tax in 2023. Next year, Illinois will follow suit with its 1% grocery tax.
As it stands, only nine states, including Arkansas, tax groceries. These include Hawaii, Idaho, Illinois, Mississippi, Missouri, South Dakota, Tennessee, and Utah. Notably, Hawaii and Idaho provide tax credits to help residents offset the impact of these taxes.
In Tennessee, some Republican leaders have proposed ending the 4% state sales tax on groceries. This legislative push follows suggestions from Democratic lawmakers who have previously advocated for similar measures, highlighting that certain areas impose sales taxes of up to 6.75% on essentials like bread and milk.
However, the success of this GOP-backed initiative remains uncertain. With tighter state revenues expected this year and no mention of grocery tax cuts in Governor Bill Lee’s proposed budget, it’s unclear how far the bill will progress. House Majority Leader William Lamberth indicated that proposed legislation could be refined to address essential items rather than junk food, focusing on necessities like milk, eggs, and bread.
In Alabama, Democrats are planning to propose legislation aimed at eliminating the state’s remaining 3% grocery tax. The state had already approved a plan in 2023 to gradually reduce this tax from 4% to 2%, emphasizing the need for relief for families.
Lawmakers have long discussed the idea of eliminating grocery taxes, but many proposals have stalled due to concerns about funding for education. In Mississippi, a tax cut plan is currently making its way through the legislature that would reduce the state’s 7% sales tax on groceries.
Attempts to remove grocery taxes have faced challenges; for instance, South Dakota voters recently turned down a measure to repeal the grocery tax. In Arkansas, previous leaders, including Democratic Governor Mike Beebe and Republican Governor Asa Hutchinson, had already made significant strides in reducing the grocery tax, leaving just the small fraction that Governor Sanders aims to eliminate.
While removing or reducing grocery taxes can help make a state’s tax system fairer, it poses challenges, especially in light of potential federal budget cuts. Some suggest that states might consider looking at other areas for tax relief, such as earned income tax credits or child care tax credits, to help those in need more effectively.
In summary, as discussions about grocery tax reductions unfold across several states, advocates argue that now is the time to act in the face of rising living costs.
