Food Truck and Restaurant Resale Certificate Guide: Buy Ingredients and Supplies Tax-Free

Every dollar a food truck, restaurant, caterer, or bakery spends on ingredients is a dollar that goes into a product sold to a customer. That makes those ingredient purchases eligible for a resale certificate exemption. You buy flour, produce, meat, and spices tax-free. You then collect sales tax (where required) when you sell the finished meal, pastry, or catered spread.

A restaurant spending $12,000 per month on food and beverage supplies saves $10,080 per year at a 7% tax rate. A food truck spending $4,000 per month saves $3,360. Those savings go straight to your bottom line.

The catch: prepared food taxation is one of the most complicated areas of sales tax law. Rules differ dramatically from state to state, and sometimes from city to city.

Food Truck and Restaurant

The Basics: Why Food Service Businesses Qualify

You buy raw ingredients. You transform them into a finished product (a meal, a baked good, a catered event). You sell that product to a customer. This is a manufacturing and resale process, and your ingredient purchases qualify for the resale exemption in every state that has sales tax.

The exemption applies whether you are:

• A food truck selling tacos on the street
• A sit-down restaurant serving a five-course dinner
• A caterer providing food for a 200-person corporate event
• A bakery selling cakes, cookies, and bread
• A meal prep company packaging individual portions
• A food hall vendor or ghost kitchen operator

Apply for Your Resale Certificate

What You Can Buy Tax-Free

Food Ingredients

• Produce (fruits, vegetables, herbs)
• Meat and poultry (beef, chicken, pork, lamb, seafood)
• Dairy (milk, cream, butter, cheese, eggs)
• Grains and baking supplies (flour, sugar, yeast, baking powder)
• Oils and fats (olive oil, vegetable oil, lard, shortening)
• Spices, seasonings, and sauces (salt, pepper, hot sauce, soy sauce)
• Beverages for resale (coffee beans, tea, juice, soda syrup)
• Alcohol for cooking that becomes part of a dish (check your state)
• Condiments provided to customers (ketchup packets, mustard, salsa cups)

Packaging and Serving Supplies That Transfer to the Customer

• To-go containers (clamshells, boxes, bags)
• Cups and lids for beverages
• Paper plates, bowls, and trays
• Disposable utensils (forks, knives, spoons, chopsticks)
• Napkins provided with food
• Straws (paper or plastic, where legal)
• Wax paper, aluminum foil, and plastic wrap used to package food for sale
• Branded bags and packaging that transfers to the customer

Beverages for Resale

• Bottled water and sodas purchased for resale
• Coffee and tea (beans, grounds, loose leaf for brewing and selling)
• Juice and smoothie ingredients
• Alcohol (beer, wine, spirits) purchased for resale with appropriate licenses

What You CANNOT Buy Tax-Free

The Dine-In Distinction

When a customer eats in your restaurant, the ceramic plate, metal fork, and glass cup stay with you. Those items are your business property. You wash and reuse them. They are not resale items.

But the to-go box, plastic fork, and paper cup that leave with a takeout customer are transferred to that customer. Those are resale items. If your restaurant does both dine-in and takeout, you will have some supplies that qualify for the exemption and some that do not.

Prepared Food: The Tax Collection Side

Here is where food service gets complicated. You buy ingredients tax-free. But do you collect sales tax when you sell the finished food? It depends on your state and what you are selling.

States That Tax All Prepared Food

Most states tax food that is prepared, heated, or sold with eating utensils. This includes restaurant meals, food truck items, catered food, and bakery items sold for immediate consumption.

States That Exempt Grocery Food but Tax Prepared Food

Many states exempt "grocery" food (unprepared, unheated food sold in stores) but tax "prepared" food. The line between the two matters:

Key State Rules

Texas

Texas taxes all prepared food, including food truck sales, restaurant meals, and catered events, at up to 8.25%. Bakery items sold unheated and without utensils may qualify as exempt grocery food. See the Texas guide.

California

California exempts most cold food sold to-go but taxes hot prepared food and food sold for consumption on premises. A burrito from a food truck: taxable if heated. A packaged salad sold cold: potentially exempt. The rules are notoriously detailed. Check the California guide.

New York

New York exempts most grocery food but taxes prepared food, sandwiches, and heated food. Food sold below a certain threshold at certain venues may have different treatment. Review the New York guide.

Florida

Florida exempts most grocery food but taxes prepared food sold by restaurants and food trucks. Bakeries face a split: baked goods sold unheated and unserved may be exempt, while the same item heated or served on a plate is taxable.

Illinois

Illinois has a split rate: grocery food is taxed at 1% (state), while prepared food is taxed at 6.25% (state) plus local rates. Food trucks and restaurants charge the higher prepared food rate.

Caterers: Special Considerations

Catering adds complexity because you may be providing food, service labor, equipment rentals, and venue setup as a single package.

Separating Taxable and Non-Taxable Charges

In many states, you can reduce the taxable amount by separating charges on your invoice:

Example catering invoice for a $10,000 event:

In states that exempt service labor, separating the $2,000 staff charge reduces the taxable amount from $10,000 to $8,000. That is a meaningful difference for your client.

Food Trucks: Unique Challenges

Food trucks face some tax issues that brick-and-mortar restaurants do not.

Multiple Jurisdictions

If your food truck operates in different cities or counties, you may owe different tax rates depending on where you are parked. A food truck that works in three different counties in one week might need to track and remit three different local tax rates. Your POS system should handle this, but you need to set it up correctly.

Event and Festival Sales

Special events, farmers markets, and festivals sometimes have their own sales tax rules. Some states require temporary seller's permits for events. Others allow your standard sales tax registration. Check with event organizers, as many will require proof of your sales tax registration before you can participate.

Commissary Kitchen Supplies

Many food trucks use commissary kitchens for prep. Ingredients you buy at the commissary (through a food supplier) for your food truck menu are resale items. Your certificate applies. But commissary rental fees, shared equipment costs, and kitchen usage fees are business expenses and are not covered.

Bakeries: The Prepared vs. Grocery Divide

Bakeries sit right on the line between grocery retail and prepared food, and the tax treatment depends on how you sell.

Generally exempt (in states that exempt groceries):

• Loaves of bread sold unsliced
• Boxes of cookies or pastries for later consumption
• Undecorated cakes sold whole
• Rolls and muffins sold by the dozen, bagged

Generally taxable:

• Any item sold heated
• Any item sold with utensils or on a plate
• Individual items sold for immediate consumption
• Decorated cakes (varies by state)
• Items sold with a beverage as a "meal"

If you run a bakery with a cafe component, track your sales separately. The muffin sold in a bag to-go may be tax-exempt while the same muffin served on a plate with a latte is taxable.

Real Savings for Food Service Businesses

For a small restaurant, $10,080 in annual savings on ingredients is the difference between a profitable month and a break-even month.

Common Mistakes Food Service Businesses Make

Paying Tax on Ingredients

This is the most common and most costly mistake. Every time you pay sales tax on flour, chicken, or produce that goes into food you sell, you are overpaying. Present your resale certificate to every food supplier, from Sysco to your local produce wholesaler.

Not Registering to Collect Sales Tax

Buying tax-free is only half the equation. You must register with your state, collect sales tax on prepared food sales, and file regular returns. Operating without registration exposes you to penalties and back taxes.

Misclassifying Prepared Food as Grocery

If you sell hot food, food with utensils, or food served for on-premises consumption, it is prepared food in most states. Treating it as exempt grocery food will create liability in an audit.

Using the Certificate for Kitchen Equipment

Your commercial oven, your food truck, your walk-in cooler: these are business assets. The resale certificate does not apply. Some states offer separate equipment exemptions for food manufacturers, so ask your accountant.

How to Get Started

1. Apply for your resale certificate. Use your state's tax authority or our application service.
2. Provide the certificate to all food suppliers. Sysco, US Foods, Restaurant Depot, local wholesalers, produce vendors. Every supplier should have your certificate on file.
3. Register to collect sales tax. If you sell prepared food (and you almost certainly do), register with your state.
4. Set up your POS system correctly. Configure tax rates for each item category. Distinguish between prepared food (taxable) and grocery items (exempt in some states).
5. Track your locations. Food trucks operating in multiple jurisdictions need to track sales by location for accurate tax filing.

Apply for Your Resale Certificate Today

Related Articles

• Resale Certificate for Food Trucks and Restaurants
• What Can You Buy Tax-Free With a Resale Certificate?
• How to Set Up a Wholesale Business