Last Updated: 2025 August

This is a list of (mostly) agricultural products and what tax rate or tax category they fall into. If you can't find the answer here (or anywhere), ask me at cashkeep.bookkeeping@gmail.com.

How to Tax Farm Products

0% - Tax Exempt

General Rule: Raw or live goods in their original form. Can be packaged (tissue paper, jar, plastic bag).

• Raw Produce*

  • Fruits

  • Vegetables

  • Packaged mixes of fruits/vegetables (with NO other added ingredients)

  • Cut fruit, mixed or not

  • Herbs (not dried)

  • Loose Cut Flowers** (not arranged or assembled, but can be wrapped in tissue or other such packaging for convenience of sale)

  • Peanuts

• Pasteurized milk*

• Live Plants

  • Nursery plants

• Live Animals (including seafood animals)

• Eggs*

• Plain Honey (not whipped or spiced)

• Fish and other seafood “off the boat”*

• Whole fish - frozen or on ice*

• Shrimp/Prawns/Crab/Lobster - frozen uncooked*

• Fresh Oysters*

• Non-food

  • Cotton**

  • Ice to preserve products until sold

• Other goods or situations

  • Educational Tours

  • School Related:

    • Food, including prepared food, sold within the school building during a regular school day

    • Food, including prepared food, sold not for profit by a public school cafeteria to a child day care center that is part of the NC Child and Adult Care Food Program of the DHHS

    • Food, including prepared food, soft drinks, candy and other tangible personal property sold not for profit at an event sponsored by an elementary or secondary school when the net proceeds will be given to the school or a nonprofit charity that will deliver the net proceeds to the school

  • Non-profit related:

    • Meals to elderly or incapacitated persons delivered to their homes from a non-profit charity or religious organization

    • Food, including prepared food, sold by a non-profit religious organization where the proceeds are used for religious activities

*Retail merchant sells at 2%

**Retail merchant sells at full retail tax

2% - Food Tax

General Rule: Meat & Dairy (except pasteurized milk from its producer)

Meats include: chicken, beef, lamb, veal, turkey, pork, rabbit

Seafood include: fish, shrimp, prawns, crab, lobster

• Cuts of meat (uncooked)

  • Package of raw chicken thighs

  • Raw pork shoulder

  • Frozen raw turkeys

• Processed raw meat

  • Uncooked sausage patty

  • Uncooked bacon

• Processed/cut raw fish

  • Frozen salmon cuts

• Processed Dairy Products

  • Cheeses

  • Butter

NC Retail Tax Rate ~ 7% 

4.75% general NC state tax + local county tax rate + possible transit tax rate = ~7%

See your county’s total current tax rate here.

General Rule: Any goods that have been ASSEMBLED, HEATED, COMBINED or otherwise PREPARED.

Note, if these items are purchased from a third party (at the retail tax), then the resale to end customer is taxed at 2%.

For example, if you buy pre-packaged crackers and pay retail tax to sell in your store or at an event, you charge 2% tax when you sell them.

These groups are specifically mentioned as being taxed at the Retail tax rate:

• Dietary supplements

• Food sold through a vending machine (but only taxed at 50% of their sale price)

• Prepared food

  • Sold heated or was heated by the seller

  • Two or more foods mixed or combined to sell as a single item

  • It is sold with eating utensils (plates, cutlery, napkins, cups, straws, etc.)

• Soft drinks

• Candy (see more detail and definition here: https://www.ncdor.gov/sutb-2025-finalpdf/open) 

Other items taxed at full retail:

• Jams

• Jellies

• Relishes

• Sauces

• Cakes

• Pies

• Wine

• Catering

• Canned preserved goods with added ingredients (such as lemon juice)

Sources: 

1. NCDOR - Understanding Sales and Use Taxes on Agricultural Products

2. NCDOR - IMPORTANT NOTICE: Taxation of Food and Prepared Food

3. NCDOR - Sales and Use Tax Bulletins - specifically SUTB 2025

4. NC State Extension - Sales Tax: Exemptions for Farm Product Sales 

5. NC State - Honey and NC Sales Tax