Sales tax on pizza: what US pizzerias charge, and who pays it on app orders
In the US there is no federal sales tax or VAT. Each state (and often the county and city) sets its own, and nearly every state that has a sales tax charges it on restaurant meals, including hot pizza to go, even where grocery food is exempt. You add the tax on top of your menu price at the register. On delivery app orders, the app may collect and remit the tax for you as a marketplace facilitator, or it may not, depending on the state and the platform. Check every app’s statement.
How US sales tax works for a pizzeria
- It is added at the register, not included in the price. Your menu says $18 for a large pie; the receipt says $18 plus tax. That is the US habit, and your online ordering page should show the tax before the customer pays.
- The rate is stacked. A state rate plus county, city and sometimes special district rates. Texas, for example, charges 6.25% statewide and allows up to 2% in local taxes, for a maximum of 8.25%.
- You register first. You need a seller’s permit (or sales tax permit) from the state before you sell. It is on the permits checklist.
- You file and pay on a schedule, monthly, quarterly or yearly, depending on your volume and your state.
Why hot pizza is taxed when groceries aren’t
Many states exempt food bought at the grocery store, or tax it at a lower rate, but treat prepared food and restaurant meals as taxable. A pizza from your oven is treated as prepared food, whether it’s eaten at a table or carried out.
An example: California
California’s tax agency, the CDTFA, spells out the distinctions in its guide for restaurant owners:
| What you sell | Taxable? |
|---|---|
| Hot pizza, wings or calzones, dine-in or to go | Yes |
| Cold food sold individually to go (a salad, a cold sandwich) | Usually no, unless the 80/80 rule applies |
| A combo of hot and cold items at one price | Yes, the whole package |
| Soda and alcoholic drinks | Yes, always |
| Coffee or tea to go | No |
| Delivery charge on a taxable order | Yes, it follows the food |
| Optional tip | No |
| Mandatory tip or service charge | Yes |
CDTFA, Tax Guide for Restaurant Owners and Publication 22. Rules for other states differ.
The 80/80 rule
California applies a test to businesses where more than 80% of gross receipts come from food and more than 80% of food sales are taxable. Most pizzerias pass both tests, which means even the cold items they sell to go become taxable. The test is applied location by location, and without records showing otherwise, the CDTFA can treat all sales as taxable.
Delivery charges and service fees
In California, a delivery charge on a taxable order is taxable too, and a mixed order is taxable as a whole. Other states treat delivery and service charges differently, and some separate a delivery fee from the food if it is stated on its own line. Two principles hold widely: a mandatory charge added to a taxable sale is usually taxable, and a truly optional tip usually isn’t. Check your state’s rule before you add a “delivery fee” or “kitchen fee” to your receipts.
Delivery apps: who collects the tax?
Most states have marketplace facilitator laws, written for platforms like Amazon, that make the platform collect and remit sales tax on sales it facilitates. Whether they apply to restaurant meals sold through DoorDash, Uber Eats or Grubhub varies by state, and the platforms make their own determinations. Toast, for example, tells its restaurants that each delivery provider decides whether it is a marketplace facilitator and handles tax on its own marketplace orders.
California shows how much the contract matters. The CDTFA says that if an online ordering service acts as your agent, you are the retailer and owe tax on the full selling price, without deducting the commission. If there’s no agency relationship, the service is the retailer, needs its own seller’s permit and pays the tax, and you should hold a resale certificate from it.
What about tax on the app’s commission?
This is where the US differs most from VAT countries. There is no input tax to reclaim on a commission invoice. Whether a state taxes the service fee a platform charges you depends on how that state taxes services, and we could not find a source that settles it nationwide. Read your platform invoices to see whether tax is charged on the commission, and ask your accountant whether it should be.
Price from the pre-tax number
Because tax is added at the register, your margin is calculated on the menu price, not the total the customer pays. A $20 pie in a city with a 9% combined rate shows $21.80 on the receipt; your revenue is $20. That makes US pricing simpler than in VAT countries, but it means your ordering page must calculate tax correctly for your exact address, not a statewide average.
Common mistakes
- Using the state rate and forgetting the county and city rates.
- Not taxing a mandatory delivery or service charge where your state taxes it.
- Reporting app sales as taxable when the app already remitted the tax.
- Assuming cold items to go are exempt when your state (or the 80/80 rule) says otherwise.
- Treating a mandatory 18% party gratuity as a tip for tax purposes.
FAQ
Is takeout pizza taxed less than dine-in?
Usually not. Hot prepared food is taxable whether it is eaten in or carried out in most states with a sales tax. Check your state’s guide for restaurants.
Do I charge tax on my own delivery fee?
In California, yes, when the food is taxable. Other states differ. Your state revenue department’s restaurant guide will say.
Does DoorDash or Uber Eats pay the sales tax for me?
In some states, on some orders. Look at each platform’s statement for a line showing tax remitted by the platform, and reconcile it before you file.