Is Grocery Taxable in North Dakota?

Does North Dakota Tax Groceries?

No. North Dakota exempts food and food ingredients sold for home consumption from its 5% state sales tax, under N.D.C.C. § 57-39.2-04.1 (North Dakota Century Code). The statute names six exclusions that stay taxable: alcoholic beverages, candy and chewing gum, dietary supplements, prepared food, soft drinks with 50% or less fruit juice, and tobacco.

North Dakota’s definitions come from the Streamlined Sales and Use Tax Agreement (SSUTA), a multi-state compact the state joined as a full member on October 1, 2005, per the Streamlined Sales Tax Governing Board. SSUTA gives candy, soft drinks, and prepared food standardized legal definitions. The real question is never whether groceries are taxed. It is which items fall outside the exemption.

What Food Is Taxable in North Dakota?

Exempt staples include produce, meat, dairy, bread, and packaged ingredients. Five categories fall outside the exemption and stay taxable: candy, soft drinks, prepared food, dietary supplements, and alcoholic beverages, per the North Dakota grocery and convenience store guideline. The table below shows where each common item lands.

One correction worth flagging: frozen heat-and-cook meals and cold cookie dough are exempt food ingredients, not prepared food. The statute taxes prepared food only when the seller heats it, combines ingredients, or supplies utensils.

Is Candy Taxable in North Dakota?

Yes. Candy is a taxable exclusion from the food exemption. North Dakota defines candy as sugar, honey, or other sweeteners combined with chocolate, fruit, or nuts in bars, drops, or pieces, per N.D.C.C. § 57-39.2-04.1. Any preparation containing flour or requiring refrigeration is not candy and stays exempt.

The flour test is a label test. A product counts as flour-containing only if the ingredient list prints the word flour, per the SSUTA candy rule. A Kit Kat or Twix lists flour and is exempt. A plain Hershey’s bar has no flour and is taxable candy. North Dakota’s own guideline lists flour-based licorice as nontaxable food while taxing marshmallows and chocolate-covered nuts.

Are Soft Drinks Taxable in North Dakota?

Yes. Sweetened nonalcoholic beverages are taxable soft drinks under N.D.C.C. § 57-39.2-04.1. The definition excludes two things that stay exempt: beverages containing milk or milk substitutes, and beverages that are more than 50% fruit or vegetable juice by volume. Unsweetened bottled water is also exempt.

The line sits exactly at 50% juice. A 100% juice carton is exempt grocery food. A 10% juice drink is a taxable soft drink. Sweetened iced tea is taxable. The Streamlined board treats the juice threshold as an objective test, so marketing and intended use do not matter, per SSUTA Interpretive Opinion 2009-02.

What Counts as Prepared Food in North Dakota?

Prepared food is taxable under a three-prong test: food the seller sells heated, food the seller makes by combining two or more ingredients into one item, or food sold with seller-provided eating utensils, per N.D.C.C. § 57-39.2-04.1. The statute carves out bakery items sold without utensils and food that is only cut, repackaged, or pasteurized.

Food that needs additional cooking, not just reheating, is not prepared food, so frozen heat-and-cook meals and cold cookie dough stay exempt. The everyday contrasts: sliced deli meat is exempt, hot soup is taxable. Coffee beans are exempt, a prepared latte is taxable.

How Are Restaurant Meals and Alcohol Taxed in North Dakota?

Restaurant meals are prepared food, taxed at the 5% state rate plus local rates. Alcoholic beverages carry a separate 7% state gross receipts tax instead of the 5% rate, under N.D.C.C. ch. 57-39.6, plus any local taxes. Dietary supplements with a Supplement Facts label are taxable at the standard rate.

The 7% alcohol rate applies the same way to off-sale alcohol (liquor and grocery stores) and on-sale alcohol (bars and restaurants). Combined totals differ because some cities add a local restaurant and lodging tax. That extra tax hits on-sale drinks and prepared meals, which is why on-sale totals in cities like Rugby run higher than off-sale.

What Are North Dakota’s Local Sales Tax Rates by City?

North Dakota starts at a 5% state base, then cities and counties stack local option taxes on top, commonly 0% to 3%. The North Dakota Office of State Tax Commissioner administers every local tax centrally, so businesses file one return, unlike home-rule states. Groceries stay exempt from local tax too, because local taxes follow the state base. The table shows combined rates effective October 1, 2026.

Rates come from the ND Local Taxes by Location guideline. Some cities also levy a separate restaurant and lodging tax that appears on prepared meals and on-sale alcohol. Special district and tourism taxes exist and show up in that same line where they apply.

How Do Refund Caps (Max Tax) Work?

A refund cap limits the local tax on a single transaction. When the local tax on one sale exceeds the city or county maximum, the buyer can apply to the Office of State Tax Commissioner for a refund of the excess, per the Local Taxes by Location guideline. Fargo caps city tax at $56.25 per sale, and Bismarck at $37.50. Caps vary by jurisdiction.

Are SNAP and WIC Purchases Taxed in North Dakota?

No. Federal law exempts eligible purchases made with Supplemental Nutrition Assistance Program (SNAP) benefits from sales tax, even items that are otherwise taxable like candy and soft drinks. Items bought with Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) benefits get the same treatment.

The obligation falls on the retailer. Your point-of-sale (POS) system has to suppress tax on SNAP tender for eligible items, including split-tender orders where a customer pays part SNAP and part cash.

Do Remote Sellers Charge Sales Tax on Groceries Shipped to North Dakota?

Remote sellers that exceed $100,000 in gross sales into North Dakota must register and collect, applying the same grocery exemption logic, per Commenda’s US economic nexus thresholds guide. North Dakota removed its separate 200-transaction test, so the dollar threshold is what matters now.

Marketplace facilitators collect on behalf of their third-party sellers. If you sell exempt groceries into North Dakota through a marketplace, the facilitator handles the tax, but your sales still count toward nexus. See Commenda’s North Dakota sales tax rates page for current combined rates.

How Do You Collect Sales Tax on Food in North Dakota?

Register with the North Dakota Office of State Tax Commissioner, classify every SKU (stock keeping unit) as exempt or taxable, charge the state plus local rate for each location, and file on your assigned schedule. Mixed carts are the core risk: a grocery store with a deli sells exempt bananas and taxable rotisserie chicken on one receipt.

Track local rates by location if you run multiple stores. Keep records for exempt sales and for SNAP and WIC transactions in case of audit. You can register for a North Dakota sales tax permit before you collect, and review the North Dakota sales tax exemption rules for documentation standards.

When Do You Need a Resale or Exemption Certificate?

You need a resale certificate when you buy inventory to resell, so your supplier does not charge you tax on goods you will tax at the register. Keep a valid exemption certificate on file for every exempt buyer and for out-of-state supplier purchases. North Dakota expects you to retain this documentation to support exempt sales during a review.

How We Help With North Dakota Grocery Tax Compliance

Splitting exempt groceries from taxable candy, soft drinks, prepared food, and alcohol is a product classification problem, and it repeats on every receipt. Commenda’s indirect tax platform maps each SKU to a taxability code, applies current North Dakota state and local rates, and handles registration and filing across jurisdictions. It connects to your stack through 100+ ERP, API, and custom integrations, where ERP means enterprise resource planning.

Check your exposure with Commenda’s US economic nexus thresholds guide before you register, and look up any rate with the sales tax calculator, which returns rates only and does not check nexus. Book a demo to get a free review of your food and beverage taxability mapping.