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.

Can a nonprofit order catering tax exempt?

Only where that state exempts the organization’s purchases and the organization is registered with that state. Texas and New York do, through Form 01-339 and Form ST-119.1 respectively. California does not: CDTFA Publication 18 says there is no general sales and use tax exclusion for nonprofit organizations, so a California charity generally pays tax on catering. Federal 501(c)(3) status by itself exempts nothing at the state sales tax level.

What are the best practices for ordering tax exempt catering?

Four things, before the event rather than after it: register the organization for a sales tax exemption in the state where the food will be served; give the caterer that state’s completed exemption certificate up front, not with the payment; pay from the organization’s own check, card, or account, never an employee’s; and expect alcohol to be billed as taxable even when the food is exempt. Ask for an itemized quote so the exempt and taxable lines are visible before you sign.

Can an employee pay for a tax exempt food order and be reimbursed?

No, in the states that publish the rule. New York Publication 843 says payment must be made using cash, a check, or a debit or credit card of the organization, and that an employee, officer, or agent may not use a personal check or personal card even if they will later be reimbursed — and the organization is then not eligible for a refund of the tax paid. Texas likewise says employees and volunteers cannot buy tax free even if reimbursed by the nonprofit.

Is tax exempt ordering available through DoorDash, Grubhub, or Uber Eats?

It depends on the platform, because where the platform is the marketplace facilitator collecting the tax, the exemption certificate has to reach the platform rather than the restaurant — the restaurant never charged the tax. If the checkout cannot accept your state certificate, the order is taxed even though the buyer is exempt. Confirm the platform’s exempt-ordering process before the event; unwinding it afterwards usually means asking the state for a refund, not the platform.

Is tax exempt food delivery treated differently from pickup?

The exemption test is the same — buyer registration, certificate, and payment source — but delivery adds the fee question. Where the food itself is exempt to that buyer, a separately stated delivery charge normally follows the food. Where the buyer is not exempt, the delivery charge on taxable prepared food is generally taxable, as in New York, which includes a restaurant delivery charge in the taxable total.

Restaurant, Catering & Tax-Exempt Food Order Sales Tax

Updated 2026-08-17

Reviewed by Nexus by State research team using official state tax sources. Last reviewed 2026-08-17.

Prepared food, tips, and delivery-app sales tax for restaurants and caterers — plus what a tax-exempt catering or food order from a nonprofit, school, or government buyer actually requires.

Restaurant sales tax is a line-item, selling-channel, and buyer 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 — and, as of 2026-08-17, a tax-exempt catering order turns on the buyer’s state exemption registration and on which card pays the bill, not on the food. Map each menu item, fee, ordering channel, and buyer type 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.

Tax-exempt catering and tax-exempt food ordering

A tax-exempt catering order is exempt because of the buyer, not because of the food. As of 2026-08-17, the three things that decide it are whether the buying organization holds that state's own exemption registration, whether a properly completed exemption certificate reaches the seller, and whose money pays the invoice. Prepared food that is taxable to a walk-in customer stays taxable to a nonprofit that gets any one of the three wrong.

The state exemption is separate from 501(c)(3) status. Federal income-tax exemption does not carry a sales tax exemption with it. California is the clearest case: CDTFA Publication 18 states that "there is no general sales and use tax exclusion for nonprofit organizations," and repeats that "there is no blanket sales or use tax exemption available for nonprofit religious organizations or churches, even when the organizations are exempt from income tax." A California charity ordering catering generally pays sales tax on it. Texas and New York do exempt qualifying organizations' purchases, but only after the organization has registered with that state and only through that state's own certificate — Form 01-339 in Texas, Form ST-119.1 in New York.

The commonest way an exempt buyer loses the exemption is paying with a personal card. New York Publication 843 is explicit: payment "must be made using cash, a check, or a debit or credit card of the organization," and an employee, officer, or agent "may not use a personal check or personal debit or credit card to make tax-exempt purchases on behalf of the organization, even if that person will later be reimbursed by the organization." New York's own example adds the part that stings: where an employee pays personally, the organization "is not eligible for a refund of the tax paid." Texas draws the same line, stating that employees and volunteers "cannot buy personal items tax free, even if traveling on official business or if reimbursed by the nonprofit organization." New York also requires that both the organization's name and the individual's name appear on the bill or invoice.

Not everything on a catering invoice rides the exemption. Texas conditions the exemption on the purchase relating to the organization's exempt purpose, and says outright that "beer, wine and liquor purchases do not usually qualify for exemption because they are not part of the nonprofit's exempt purpose." A single event invoice can therefore be part exempt (food and service for the exempt program) and part taxable (the bar), which is one more reason to itemize the quote rather than bill one lump sum.

Ordering through a delivery or catering platform moves the certificate, not the rule. Where a marketplace facilitator is the party collecting the tax on the order, the exemption certificate has to reach that collecting party, because the restaurant never charged the tax in the first place. If the platform's checkout cannot accept the state certificate, the order is taxed even when the buyer is genuinely exempt — so confirm the platform's exempt-ordering process before the event rather than trying to unwind it afterwards. Who counts as the collecting party varies by state and platform: see who collects sales tax on DoorDash and Uber Eats orders.

None of this is a substitute for the state's own instructions to the seller. A caterer accepting a certificate is the party the state audits, so keep the completed certificate, the invoice showing the organization as payer, and the event documentation together.

Exempt-purchase source notes checked 2026-08-17

Primary sources for the exempt-buyer section: Texas Comptroller, Exempt Organizations: Sales and Purchases (Publication 96-122) (date_retrieved: 2026-08-17), New York Publication 843, A Guide to Sales Tax in New York State for Exempt Organizations (revision 12/09 as printed on the publication; date_retrieved: 2026-08-17), and California CDTFA Publication 18, Nonprofit Organizations (January 2026 edition; date_retrieved: 2026-08-17). These three states are cited because they publish the rule explicitly and because they disagree with each other; they are not a stand-in for the other 47. Check the state where the food is served.

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.
Before invoicing an exempt buyer, collect that state's completed exemption certificate, confirm the organization itself is paying, and split any alcohol onto its own taxable line.
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.
Can a nonprofit order catering tax exempt?: Only where that state exempts the organization’s purchases and the organization is registered with that state. Texas and New York do, through Form 01-339 and Form ST-119.1 respectively. California does not: CDTFA Publication 18 says there is no general sales and use tax exclusion for nonprofit organizations, so a California charity generally pays tax on catering. Federal 501(c)(3) status by itself exempts nothing at the state sales tax level.
What are the best practices for ordering tax exempt catering?: Four things, before the event rather than after it: register the organization for a sales tax exemption in the state where the food will be served; give the caterer that state’s completed exemption certificate up front, not with the payment; pay from the organization’s own check, card, or account, never an employee’s; and expect alcohol to be billed as taxable even when the food is exempt. Ask for an itemized quote so the exempt and taxable lines are visible before you sign.
Can an employee pay for a tax exempt food order and be reimbursed?: No, in the states that publish the rule. New York Publication 843 says payment must be made using cash, a check, or a debit or credit card of the organization, and that an employee, officer, or agent may not use a personal check or personal card even if they will later be reimbursed — and the organization is then not eligible for a refund of the tax paid. Texas likewise says employees and volunteers cannot buy tax free even if reimbursed by the nonprofit.
Is tax exempt ordering available through DoorDash, Grubhub, or Uber Eats?: It depends on the platform, because where the platform is the marketplace facilitator collecting the tax, the exemption certificate has to reach the platform rather than the restaurant — the restaurant never charged the tax. If the checkout cannot accept your state certificate, the order is taxed even though the buyer is exempt. Confirm the platform’s exempt-ordering process before the event; unwinding it afterwards usually means asking the state for a refund, not the platform.
Is tax exempt food delivery treated differently from pickup?: The exemption test is the same — buyer registration, certificate, and payment source — but delivery adds the fee question. Where the food itself is exempt to that buyer, a separately stated delivery charge normally follows the food. Where the buyer is not exempt, the delivery charge on taxable prepared food is generally taxable, as in New York, which includes a restaurant delivery charge in the taxable total.