Is prepared food taxable at restaurants?

Often, but the exact answer depends on the state, food, and order type. California generally taxes food eaten on premises and hot food to go, while individually priced cold food to go can be exempt unless its 80-80 rule applies. New York generally taxes heated food and on-premises meals.

Are restaurant tips and mandatory gratuities taxable?

Check the state conditions. California excludes optional tips but taxes mandatory tips and service charges. New York can exclude a mandatory gratuity only when it is separately stated, identified as a gratuity, and paid entirely to employees; an ordinary service charge is taxable.

Does DoorDash collect sales tax on my restaurant orders?

Do not assume the platform collects solely because of its brand. California does not automatically treat a delivery network company as a marketplace facilitator, although the company may elect that status. Washington recognizes several delivery business models. Confirm the platform agreement and state rule, then reconcile who reported the sale.

Are restaurant delivery fees taxable?

They can be. California taxes a delivery fee attached to hot prepared food but generally does not tax the fee when the delivered food is exempt. New York includes a restaurant delivery charge in the taxable total when the food and drink are taxable.

Sales Tax for Restaurants and Food Service

Updated 2026-07-19

Reviewed by Nexus by State research team using official state tax sources. Last reviewed 2026-07-19.

How sales tax applies to restaurants, cafes, food trucks, and catering — prepared food rules, tips handling, third-party delivery apps, and state-by-state variations.

Restaurant sales tax is a line-item and selling-channel problem, not a single rate toggle. As of 2026-07-19, a state can classify dine-in meals, hot food to go, cold food to go, gratuities, delivery fees, and app orders differently. Map each menu item, fee, and ordering channel to the state rule instead of assuming every prepared-food or platform sale is treated alike.

A restaurant receipt is not one sales-tax category. As of 2026-07-19, taxability can turn on the food's temperature and form, where the customer eats it, whether a charge is optional, and which party the contract treats as the retailer.

Prepared food vs groceries

Do not reuse a grocery exemption as the restaurant rule. California, for example, taxes food eaten at the restaurant and usually taxes hot prepared food sold to go, while individually priced cold food sold to go is usually exempt unless rules such as the state's 80-80 test apply. New York generally taxes heated food and food sold for on-premises consumption, but its examples also separate exempt packaged items in some off-premises orders. Your point-of-sale system therefore needs item and order-type codes, not one blanket "food" setting.

Tips and gratuities

The voluntary-versus-mandatory label is only the first test. California excludes an optional tip but includes a mandatory tip, gratuity, or service charge in taxable gross receipts. New York also excludes voluntary tips, yet a mandatory gratuity can remain nontaxable when it is separately stated, specifically identified as a gratuity, and paid in full to employees. A generic "service charge" does not receive that New York treatment. Configure and document each charge under the state's actual conditions.

Third-party delivery apps (DoorDash, Uber Eats, Grubhub)

Do not assume the app always becomes the marketplace facilitator or retailer. California law says a delivery network company is not a marketplace facilitator merely because it arranges local delivery; it may elect that status. Washington's restaurant-delivery advisory separately analyzes marketplace-facilitator, employee-delivery, and resale models. Read the platform agreement and state rule together, then document who sells the meal, who collects the tax, and how the restaurant reports the receipt.

Alcohol and specialty items

Alcohol, soft drinks, candy, bottled water, and combination meals can follow rules that differ from ordinary food. Give each category its own POS code and verify the state and local guidance for every location rather than applying the meal rate to the entire menu.

Catering

A food delivery and a staffed catered event are not automatically the same transaction. States can treat serving, rentals, labor, and delivery differently. Keep those charges separately stated, but do not assume itemization creates an exemption; check the state's catering guidance for the event location before quoting the job.

Source notes checked 2026-07-19

Primary sources checked for this page: California CDTFA Tax Guide for Restaurant Owners (date_retrieved: 2026-07-19), California Revenue and Taxation Code section 6041.5 (date_retrieved: 2026-07-19), New York Tax Bulletin ST-320, Gratuities and Service Charges (updated 2026-02-19; date_retrieved: 2026-07-19), New York Tax Bulletin ST-806, Sales by Restaurants (updated 2026-02-24; date_retrieved: 2026-07-19), and Washington DOR ETA 3223.2021, Restaurant and Grocery Delivery Services (date_retrieved: 2026-07-19). See how Nexus by State verifies and ages sources in the Methodology & Sources.

Compliance checklist

Register for a sales tax permit in each state where you operate.
Configure POS categories by item, temperature/form, on-premises or to-go treatment, and separately stated fees.
Separate optional tips, mandatory gratuities, and service charges, and retain the policy showing how each amount is distributed.
Keep each delivery-platform agreement and reconcile its tax report to the corresponding orders without assuming the platform remitted.
File on the cadence assigned by the state, including any required returns for periods with no direct taxable sales.

Frequently asked questions

Is prepared food taxable at restaurants?: Often, but the exact answer depends on the state, food, and order type. California generally taxes food eaten on premises and hot food to go, while individually priced cold food to go can be exempt unless its 80-80 rule applies. New York generally taxes heated food and on-premises meals.
Are restaurant tips and mandatory gratuities taxable?: Check the state conditions. California excludes optional tips but taxes mandatory tips and service charges. New York can exclude a mandatory gratuity only when it is separately stated, identified as a gratuity, and paid entirely to employees; an ordinary service charge is taxable.
Does DoorDash collect sales tax on my restaurant orders?: Do not assume the platform collects solely because of its brand. California does not automatically treat a delivery network company as a marketplace facilitator, although the company may elect that status. Washington recognizes several delivery business models. Confirm the platform agreement and state rule, then reconcile who reported the sale.
Are restaurant delivery fees taxable?: They can be. California taxes a delivery fee attached to hot prepared food but generally does not tax the fee when the delivered food is exempt. New York includes a restaurant delivery charge in the taxable total when the food and drink are taxable.