I’m confused, please help me clarify the taxes on groceries in Durango. As I understand it, prepared foods such as deli and restaurants charge 9.4%. But I thought basic groceries were exempt from sales tax for foods for home consumption including produce, dairy, bread, canned goods and meat. Today I bought my groceries in Durango totaling essentially $220 and paid $14.29 in sales tax (6.5% on just about everything plus 2.9% more on not much).
Please explain this “no tax on groceries” in Colorado? When I google my question, it confirms my mistake thinking that there is no tax on groceries for home consumption. No one at the grocery store knew the answer, so I believe your answer will be helpful to many of us. We know our groceries have gone up but it seems taxes continue to haunt in hidden places. What should I expect to pay for taxes for groceries in Durango, Bayfield, Ignacio and also Aztec? What percentages and for what? Is it worth a drive to Aztec for groceries? What would taxes be for groceries delivered to an unincorporated address in La Plata County?
Thanks! Sign me, Healthy and Frustrated
Dear Healthy and Frustrated,
I received your question a couple of weeks ago and I’ve been saving my grocery receipts to see if I could make sense of this on my own, and I admit it’s confusing. There are three levels of sales tax on most items in Durango – 2.9% state, 3.0% for La Plata County, and 3.5% for the city of Durango, for a total of 9.4%. As you indicate, there is a partial exemption for basic groceries, but only for state taxes. There is no exemption for city and county taxes on basic groceries, so we’re paying most of our sales tax even on groceries because most are local taxes.
In the pictured receipt from City Market, there are five items – four items marked “B,” and the cling wrap marked “T.” Now you’d think the “T” means state-taxable and the “B”s mean non-state taxable, but not so – one of the other four items also was taxed at the state level, the one marked “SNWFX” which was cut fruit so I guess deemed “ready to eat” taxable like in restaurants, versus prepare-at-home foods not subject to the state tax. It took me a long time and trips to both north and south City Market and Natural Grocers making small purchases of both types of items to help me figure this out. And sometimes items are listed as a “B” taxable category and sometimes a “D,” for no apparent tax rate reason. And it’s different at each store – Natural Grocers has a different system, as do other stores, I’m sure.
As for going to Aztec, New Mexico doesn’t have a sales tax per se, but has a “gross receipts tax” levied at the business level which usually gets passed onto the consumer, so the result is the same. The state tax rate there is about 4.9%, and the Aztec city tax is another 3.3%, but groceries are exempt from both, so you could save on taxes by going down there but then you have to figure in your gas costs if making a special trip, and I have no idea how the basic pre-tax cost of groceries there compares to Durango. As for getting groceries delivered to areas in La Plata County outside Durango, I guess you might save the Durango 3.5%, although I’d guess the delivery cost would exceed that?
But there is help for Durango households under 50% of the area median family income by family size: a city of Durango grocery tax refund. Google that to find the application that will tell you if you qualify. Luckily you don’t need to save receipts; it’s a set amount – for a family of four, it’s $378 right now, but the amount and availability change from year to year.
Email questions and suggestions to actionline@durangoherald.com or mail them to Action Line, The Durango Herald, 1275 Main Ave., Durango, CO 81301. Today’s Fun Fact: Sales taxes didn’t really exist in the Unites States until the 1930s, in response to the Great Depression to replenish state coffers. While that might seem counter-intuitive given the regressive nature of sales taxes (lower income folks spend more of their money on purchases), groceries and other necessities were often exempted in order to avoid that result.
