35 Miss. Admin. Code Pt. IV, Subpt. 9, Ch. 02 — Beverage and Food Businesses

100 General
101 The gross proceeds of sales by restaurants, cafes, cafeterias, snack bars, drive -ins,
beer parlors, lounges, night clubs, concessions, caterers or other vendors of
beverages and food products are taxable at the regular retail rate of tax.
102 Retail sales of groceries are taxable at the five percent (5%) rate of sales tax,
effective July 1, 2025. The term "groceries" refers to food or drink for human
consumption that is eligible to be purchased with Supplemental Nutrition Assistance
Program (SNAP) benefits. Groceries do not include hot or heated food items such as
rotisserie chicken, plate lunches, and other hot or cold prepared foods for immediate
consumption, which will remain taxable at seven percent (7%). Items purchased
with SNAP benefits will continue to remain exempt from sales tax.
103 (Reserved)
200 Gross Proceeds of Sales
201 Taxable gross proceeds include receipts from:

# 1.

Admissions, minimum and cover charges for entertainment;

# 2.

Sales of tangible personal property;

# 3.

Service charges; and

# 4.

Vending machine sales (except full-service vending machines)
202 Gratuities or tips specifically added as such on the ticket to the cost of the meal, with
the entire proceeds of the indicated gratuity going to the employee of the restaurant,
shall be considered in the same light as gratuities paid directly to the employee and
are not considered to be taxable income subject to sales tax.
203 The value of merchandise withdrawn from stock for consumption or any other use
by the owner shall be included in gross proceeds of sales taxable at the regular retail
rate.
204 The value of employee meals prepared by a restaurant and provided at no charge to
employees of the restaurant is not included in the restaurant's taxable gross proceeds
of sales. Restaurants that are operated as a part of a hotel, casino, hospital or other
place of business cannot include employee meals provided to employees working in
other areas of the operation.
205 The value of meals prepared by a restaurant and donated to a charitable organization
exempt from federal income tax under IRC Section 501(c) (3) that regularly provides
food to the needy and the indigent is not included in the restaurants' taxable gross
proceeds of sales as provided for in Miss. Code Ann. Section 27-65-3(h).
206 Food service companies who operate restaurants or cafeterias are to include any
underwriting, management or other fees paid by the client. Clients, who underwrite
or discount meals to their employees and for whom the food service company serves
as an agent for food service operations, may obtain a business license for the food
service operation and pay the regular retail sales tax on the greater of (a) the meal
charges to employees or (b) the cost to the employer of all purchases utilized in the
food service operation, with employer costs for food preparation or food service
management being expressly excluded from the computation of purchases. This sales
tax treatment shall apply regardless of who is the food service operator as long as an
agency relationship exists between the client/employers and the food service
operator.
207 Food sold to schools or students as regular student meals is exempt from sales tax
pursuant to Miss. Code Ann. Section 27 -65-9(2)(a) and (b). Food served at banquets
and luncheons for student groups is exempt from sales tax when the meal is paid for
directly by the exempt entity. Food sold by or through school cafeterias and dining
halls to non-students such as faculty members, employees, visitors and the public is
subject to sales tax. Additional information concerning food sales at schools,
colleges and universities can be found in Title 35, Part IV, Subpart 13, Chapter 2 of
the Mississippi Administrative Code.
208 (Reserved)
300 Purchases
301 Purchases of equipment, fixtures, supplies and advertising materials that are used or
consumed in the operation of the business are taxable at the regular retail rate of
sales or use tax. Examples include soap, washroom supplies, cleaning materials,
reusable napkins or dishes, etc.
302 Purchases of merchandise that become a part of products resold are exempt from
sales tax. Examples include salt, pepper, flour, shortening, cooking oil, etc.
303 Purchases of non -reusable products that accompany food or beverage products sold
are exempt from sales tax. Examples include paper or plastic napkins, plates, cups,
knives, forks, spoons, wrapping paper, boxes, etc.
304 (Reserved)
400 Reporting Requirements
401 Adequate records must be maintained to substantiate tax classifications of sales and
purchases.
402 (Reserved)
500 Local and Private Levies
501 Additional local levies may be applicable to sales by restaurants depending on where
the restaurants are located in this state. The local tax shall be invoiced and collected
as a separate levy.
502 The local levy is due on the same basis as the sales tax and is levied on the sale of
prepared foods. Additionally, some local levies may also include the sale of beer
and/or alcoholic beverages.
503 Restaurants are defined as any place where prepared food and beverages are sold for
consumption, whether the food and beverages are consumed on the premises or not.
Restaurants do not include any school, hospital, convalescent or nursing home, or
any restaurant -like facility operated by or in connection with a school, hospital,
medical clinic, or convalescent or nursing home providing food for students,
patients, visitors or their families.
504 The term "prepared food" includes:
1. Food made to order upon the customer's request;
2. Food sold in a heated state or heated by the seller;
3. Two or more food ingredients mixed or combined by the seller for sale as a
single item, but not including food that is only cut, repackaged, or pasteurized by
the seller, and eggs, fish, meat, poultry, and foods containing these raw animal
foods requiring cooking by the consumer as recommended by the Food and Drug
Administration to prevent food borne illnesses: and
4. Food sold with eating utensils "provided by the seller," including plates, knives,
forks, spoons, glasses, cups, napkins, or straws. Eating utensils provided at no
charge to a customer with the purchase of a food item that remains in its original
container packaged by the manufacturer is not considered prepared food. This
includes items such as a cup of yogurt provided with a spoon.
505 Any person who holds a valid direct pay permit cannot use such permit to cover any
local levy. All taxes due from any of the local levies must be paid at the time of
purchase and cannot be remitted on a use tax return through the use of a direct pay
permit.
506 (Reserved)
35.IV.9.02 revised effective August 8, 2025