Arkansas Grocery Tax

TL;DR

Arkansas taxes groceries at 0.125% today, but the state grocery tax becomes 0% from 1 January 2026; local taxes still apply, so businesses must update POS rules accordingly.
Prepared food, soft drinks, candy, and alcohol do not qualify as groceries and are taxed at full state + local rates.
Local rate variations are significant, with cities like Little Rock, Fayetteville, and Fort Smith applying different combined rates.
SNAP/WIC items are never taxed when processed correctly, requiring accurate POS tagging.
Misclassification creates audit exposure, making automation essential for clean item mapping, nexus checks, and DFA-aligned filings.

Arkansas grocery tax rules are more forgiving for basic food than for restaurant meals and soft drinks, but you still need to track different rates, exemptions, and local add‑ons carefully to stay compliant.

This guide explains how the Arkansas grocery tax works today, what changes are coming, and how you can keep your food and beverage sales tax setup accurate without losing time on manual research.

Does Arkansas Tax Groceries?

Arkansas grocery tax rules currently apply a very low state rate to eligible groceries, while most other taxable goods sit at the full state rate plus local tax. Arkansas has a sales tax on groceries, but it’s a reduced rate, and it doesn’t apply equally to all food and beverage items.

As a retailer, you deal with different treatments for grocery staples, prepared food, soft drinks, and candy, which is why you cannot treat “tax on food in Arkansas” as a single flat rule. These Arkansas grocery tax rules matter for you because they affect shelf pricing, POS setup, margins, and refund risk during a sales tax audit. If your staff rings up a bag of apples, a candy bar, and a hot prepared meal with the same rate, you can undercharge or overcharge customers and trigger penalties when the Department of Finance and Administration (DFA) reviews your returns.

Getting the grocery tax treatment in Arkansas right also helps you manage SNAP/WIC transactions correctly so you do not tax purchases that should be exempt at the point of sale.

Overview of Sales Tax in Arkansas

Arkansas imposes a state sales tax rate of 6.5% on most retail sales, including tangible personal property, taxable services, and certain digital products. Cities and counties may add 0.25% to 5.125% in local taxes, creating combined rates of up to 11.625% depending on the jurisdiction. The applicable rate is based on the customer’s location at the point of sale or delivery, so tax amounts can differ between areas like Little Rock and Fayetteville.

Like most states, Arkansas follows the general U.S. sales tax structure: most physical goods and some services are taxable unless specifically exempt. Categories such as groceries, prescription drugs, and manufacturing inputs may receive reduced rates or exemptions. Businesses collect the tax from customers, hold it in trust, and remit it through periodic sales and use tax returns.

The Arkansas Department of Finance and Administration publishes rate charts, jurisdiction codes, and updates on legislative changes, such as the Grocery Tax Relief Act. Businesses should rely on the DFA guidance when maintaining or updating their internal Arkansas sales tax procedures.

Grocery Tax Rules in Arkansas

Arkansas currently applies a 0.125% state sales tax rate to qualifying “food and food ingredients,” while most non-food items remain taxed at the full 6.5% state rate plus local tax. This reduced grocery rate applies to everyday staples such as milk, bread, fruit, vegetables, and other basic food items meant for home consumption. From 1 January 2026, the Grocery Tax Relief Act will eliminate the remaining state-level grocery tax, making qualifying food fully exempt at the state level, although local sales tax will still apply.

Key categories:

Arkansas draws a strict distinction between groceries and several other food-related categories. These categories remain subject to the full state and local rate and must be coded correctly in your POS system:

Prepared food such as hot meals, deli items that are heated, or restaurant-style orders sold in grocery environments.
Soft drinks, including bottled soda, fountain beverages, and any sweetened carbonated drink.
Candy, such as chocolate bars and packaged sweets, falls outside the “food and food ingredients” definition.
Alcoholic beverages, including beer, wine, and spirits, are sold regardless of where they are sold.
Heated or prepared bakery goods, such as warm pastries or items sold as part of a meal.

Clear coding is essential because these categories closely resemble grocery items but do not receive the reduced or exempt treatment. Misclassification can lead to incorrect tax collection and expose a business to audit issues.

SNAP and WIC considerations

SNAP and WIC benefits follow federal USDA rules and are not subject to sales tax when used correctly. To ensure US sales tax compliance, retailers should:

Mark SNAP-eligible items in POS systems so they process as non-taxable when benefits are used.
Block non-eligible items- alcohol, hot prepared food, and non-food goods- from being paid entirely with SNAP/WIC.
Apply tax appropriately when mixed payments (SNAP plus cash/card) are used.
Maintain detailed transaction records for potential state review of EBT activity.

Nexus thresholds for out-of-state sellers

Arkansas requires out-of-state businesses to collect sales tax, including grocery-related items, if they meet:

Physical nexus through employees, inventory, property, or facilities in Arkansas.
Economic nexus by exceeding $100,000 in Arkansas sales or 200 transactions in the current or previous year.

With Arkansas moving toward a full state-level exemption for groceries in 2026, retailers must maintain accurate product classifications and POS logic to ensure correct treatment of food, prepared items, beverages, and SNAP/WIC eligibility.

Tax on Food and Beverages in Arkansas

You deal with more than just grocery staples when you look at tax on food in Arkansas, because each category can follow a different rule. For practical purposes, Arkansas’s food tax splits items into buckets: basic groceries, prepared food, beverages, and special items like candy and alcohol.

Key points for the food and beverage tax in Arkansas include:

Grocery staples such as bread, cereal, milk, fresh fruits, and vegetables qualify for the reduced grocery rate today and will be exempt from state tax from 2026, but local tax can still apply.
Prepared meals like restaurant dishes, takeout orders, hot deli meals, and heated bakery items are taxed at the full state rate plus local tax because they fall under “prepared food.”
Soft drinks and candy do not get the grocery rate, so they stay at the general state and local rate even when sold in a supermarket.
Alcoholic beverages, including beer, wine, and spirits, remain fully taxable and may also fall under separate excise taxes.

For your pricing and POS settings, it helps to build a simple internal chart that shows which food and beverage codes sit under the Arkansas grocery tax treatment and which stay in the general sales tax bucket.

Local Jurisdiction Variations in Arkansas

Arkansas may have a single statewide sales tax framework, but the actual rate charged on groceries and other taxable items varies significantly by local jurisdiction. Every city and county can adopt its own local sales tax, which is added on top of the state rate.

This makes Arkansas grocery tax decisions more complex, especially as the state grocery tax drops to 0% in 2026. Even with the statewide exemption, many shoppers will still see local tax on qualifying food items because local rates remain fully in effect unless a jurisdiction votes otherwise.

According to a recent rate lookup (for ZIP 72207), the combined total sales tax rate in Little Rock, Arkansas, in 2025 is 8.63%. That 8.63% already includes the state base tax (6.5%), the county tax (Pulaski County – 1.0%), and the city tax (Little Rock – about 1.13%)
Fayetteville’s combined sales tax rate is 9.75%, with a local portion of 3.25% (2% city + 1.25% county). Local taxes continue to apply to groceries even when the state grocery rate falls to 0%.
Fort Smith’s combined sales tax rate is 9.5%, with a local portion of 3% (2% city + 1% county). Prepared food, soft drinks, and candy remain fully taxable at both the state and local levels.

Local governments adopt and modify these rates through ordinances, and the Arkansas Department of Finance and Administration (DFA) publishes updated state and local sales tax rate charts along with jurisdiction codes.

Retailers should review these DFA publications regularly or rely on a sales tax automation platform that updates Arkansas rate changes automatically.

Examples: How Grocery Tax Applies in Arkansas

It is easier to see how sales tax on groceries in Arkansas works when you walk through common transactions. These examples simplify the math but show how classification, rates, and SNAP/WIC rules come together in daily operations.

Bag of apples: As fresh produce, a bag of apples counts as groceries and qualifies for the reduced grocery rate today, and for a state‑level exemption from 2026 onward, while still being subject to any local tax.
Packaged candy: A chocolate bar or bag of sweets is treated as candy, not grocery food, so it is taxed at the full state and local rate like other general merchandise.
Restaurant meal: A sit‑down or takeout restaurant meal is “prepared food,” so it is always taxed at the general rate, regardless of whether it includes items that would otherwise be groceries if sold at a supermarket.
Coffee beans vs brewed coffee: A bag of coffee beans bought in a grocery store qualifies as groceries, while a cup of brewed coffee from a café or grocery coffee counter falls into the prepared beverage category and is taxed at the full rate.

You can use these examples to test your POS setup and internal sales tax guide for Arkansas grocery tax, so that staff understand why identical items in different contexts (beans on a shelf versus coffee in a cup) can have different tax outcomes.

Compliance Challenges for Businesses in Arkansas

From a business perspective, the tax on food in Arkansas creates a mix of straightforward discounts for groceries and more complex classification tasks for everything else. Even experienced accountants and tax advisors can run into trouble when local rules change or when the DFA updates definitions and exemptions.

Common problem areas include:

Confusing definitions of “prepared food,” especially when you sell both hot and cold items, add utensils, or bundle drinks with meals.
Managing multi‑location stores across Arkansas with different local rates and sometimes different sourcing rules, especially for delivery and pickup orders.
Handling economic nexus for out‑of‑state e‑commerce food retailers that cross Arkansas sales or transaction thresholds and need to register for a sales tax permit.
Keeping up with DFA notices on acts like the Grocery Tax Relief Act, changes in what states do not accept out of state resale certificates, or updates to the statute of limitations for sales tax assessments.

If these details slip, you risk under‑collection or over‑collection of the Arkansas grocery tax, late filings, penalties, and a tougher time if the DFA opens a sales tax audit.

For many retailers, that risk is the main reason why sales tax is important enough to justify tools and processes dedicated to sales tax compliance rather than ad‑hoc spreadsheets.

How Commenda Helps with Arkansas Grocery Tax Compliance

Commenda helps businesses manage the Arkansas grocery tax by automating item-level tax decisions and applying the correct rate for groceries, prepared food, soft drinks, candy, and alcohol. The platform updates your tax rules whenever state or local laws change, including the upcoming shift to a full state-level grocery exemption. It also supports sales tax exemption certificate tracking, nexus monitoring, and return preparation aligned with Arkansas filing rules.

You also get clear reporting and audit-ready records, giving you confidence if the DFA reviews your filings. Book a free demo today to see how Commenda keeps Arkansas grocery tax compliance accurate and effortless.

FAQs

Q. Are groceries taxed in Arkansas?

Yes, qualifying groceries currently face a very low state rate plus local tax, and from 2026, the state portion will be exempt, while local tax can still apply.

Q. Is there sales tax on prepared food in Arkansas?

Yes, prepared food such as restaurant meals and hot deli items is taxed at the full state rate plus any local sales tax.

Q. Are soft drinks and candy taxed?

Yes, soft drinks and candy do not qualify for the reduced grocery rate and are taxed at the general state and local rate.

Q. Are groceries purchased with SNAP/WIC taxed?

No, eligible groceries bought with SNAP or WIC benefits are not taxed, as long as the retailer processes them correctly through the EBT system.

Q. Do restaurants charge sales tax in Arkansas?

Yes, restaurants charge sales tax at the general rate on meals and drinks, since these count as prepared food and beverages.

Q. How often do grocery tax laws change?

Arkansas grocery tax rules may change when new acts, such as the Grocery Tax Relief Act, pass, and rate updates can occur at the start of a calendar quarter or year.

Q. How can businesses automate compliance?

You can use a sales tax platform that keeps Arkansas rates, grocery rules, nexus thresholds, and filing schedules up to date and integrates with your POS or e‑commerce system.

Q. Does Commenda’s software handle multi‑state grocery tax?

Yes, Commenda is built to manage grocery and food tax rules for Arkansas and other states, so you can apply consistent item mapping while still respecting each state’s rules.

Q. Do you need a sales tax permit to collect the Arkansas grocery tax?

Yes, you must register with the Arkansas DFA and obtain a sales tax permit before you collect state and local sales tax, including the Arkansas grocery tax, from customers.

Q. What is the statute of limitations for Arkansas sales tax assessments?

Arkansas usually follows a three‑year statute of limitations for sales tax assessments, with longer periods possible in cases of fraud or substantial underreporting.