Does sales tax apply to take-out food? That depends

Does sales tax apply to take-out food? That depends
Sales tax must applied to some -- but not all -- take-out orders. (Los Angeles Times)

Bud recently went to a Subway outlet in La Mirada. He says he was charged a sales tax, even though his order was to-go.

His question is straightforward: Can a California restaurant charge sales tax for take-out food?


And the answer, as in many tax questions, is maybe.

Here's what the State Board of Equalization has to say:

"It does not matter whether a food product or beverage is sold a la carte or as part of a meal. If it is sold for consumption at your place of business, it is generally subject to tax."

So if you dine at the restaurant, you'll pay a sales tax.

"When food is sold on a to-go or take-out basis," the agency says, "the taxability of the sale will depend in part on whether your sales meet the requirements under the 80/80 rule."

The 80/80 rule?

This applies if more than 80% of a business' revenue comes from selling food, and more than 80% of sales is from food eaten on the premises or is served hot (even to-go). There are some exceptions, but that's the crux of the 80/80 rule.

Again, from the tax agency: "A cold food product sold individually and to-go is not taxable. The sale of a cold food product sold as part of a combination package may be taxable ... If you sell an egg salad sandwich to go, you are not liable for tax on the sale. However, if you sell an egg salad sandwich as part of a combination package, you may be liable for tax."

So, Bud, if whatever you got at Subway was hot, the restaurant was correct to charge a sales tax. Ditto if it was part of a combo. If it was cold, the tax might have been unwarranted.

I don't know if I'd take the time with something like this. But if you're so inclined, speak to the manager. If that doesn't provide satisfaction, contact the company's head office. If that doesn't do it, report the transaction to the Board of Equalization. If that doesn't get you there, take it to the state attorney general.

And bon appetit.

If you have a consumer question, email me at or contact me via Twitter @Davidlaz.