Publication 118, Vending Machine Food Sales

February 2014

  • Seller's permit
  • Applying and reporting tax
  • Sales tax factors
  • Additional information

This publication is designed to help you properly apply and pay sales tax for food sales you make through vending machines.

Vending machine operators generally need seller’s permits

You generally need a seller’s permit if you make sales through a vending machine. You need only one permit, regardless of how many machines you operate (the operator of the vending machine is the person who stocks the machine and collects money from it).

There are some exceptions. If you sell food through a vending machine for a price of 15 cents or less per item, you do not need a seller’s permit. Certain groups do not need a seller’s permit because their vending machine sales are not taxable. For example, parent-teacher associations or equivalent school or library support groups do not need a seller's permit for vending machine sales (see Nonprofit Organizations, publication 18).

You can register on our website at www.boe.ca.gov by selecting New Registration, and then select Register a business activity with BOE. You can also register in person at any of our field offices. Please contact out Customer Service Center for assistance at 1-800-400-7115.

Note: This publication summarizes the law and applicable regulations in effect when the publication was written as noted above. However, changes in the law or in regulations may have occurred since that time. If there is a conflict between the text in this publication and the law, decisions will be based on the law and not on this publication.


Applying tax to vending machine food sales

Tax generally applies to the sale of food in vending machines. However, some vending machine food sales are only partially taxable.

Partially taxable food sales. In a store, the sale of cold food items and individual hot drinks to go is generally exempt from sales tax. For example, tax does not apply when a grocery store sells candy, chips, fruit juice, and cups of hot coffee to go. However, the sale of those same items through a vending machine is partially taxable. Tax applies to 33 percent of your gross receipts from vending machine sales of cold food products (including noncarbonated water) and hot drinks (see Exceptions, below).

Exceptions: Tax does not apply to (1) bulk sales of candy and other food items in a coin-operated vending machine for 25 cents or less, and (2) sales of purified drinking water dispensed into a customer’s container when the water enters the vending machine through local supply lines.

Fully taxable sales. Vending machine sales of all carbonated beverages and hot food products (other than hot beverages) are fully taxable, just as they would be in a store or at a restaurant.

Please note: Be sure to keep separate records of your partially taxable and fully taxable sales. If you sell products other than food in vending machines, those sales are generally taxable.

Properly reporting tax on your sales

We presume that the sales price of items you sell in a vending machine includes an amount for sales tax reimbursement. When you complete your sales and use tax return, you must deduct that tax from your gross sales. Otherwise, you will pay too much sales tax with your return (see Sales tax factors).


Calculating the tax you owe; taxable sales factors

Use the sales tax factors below to deduct the tax amounts included in your sales and to determine your taxable gross receipts. Factors are shown for 100 percent taxable sales and 33 percent taxable food sales. Be sure to use the factor for the rate in effect at the vending machine’s location. For information about tax rates in specific areas, please select California City and County Sales and Use Tax Rates. The tax rates used in this table are effective July 1, 2013.

Tax rateFactor for tax calculation
  100% taxable 33% taxable
7.500 93.023332.2030
7.625 92.9152 32.1900
7.750 92.8074 32.1771
7.875 92.6999 32.1641
7.975 92.6140 32.1538
8.000 92.5926 32.1512
8.125 92.4855 32.1383
8.225 92.4001 32.1280
8.250 92.3788 32.1254
8.375 92.2722 32.1125
8.475 92.1871 32.1022
8.500 92.1659 32.0996
8.625 92.0598 32.0868
8.725 91.9752 32.0765
8.750 91.9540 32.0739
8.875 91.8485 32.0610
8.975 91.7642 32.0508
9.000 91.7431 32.0482
9.250 91.5332 32.0225
9.500 91.3242 31.9969
9.750 91.1162 31.9714
10.000 90.9091 31.9458

Taxable gross receipts worksheet—sample calculation

The worksheet below shows how to properly calculate the taxable gross receipts from vending machine sales and which figures to carry to your sales and use tax return. The example shows $25,000 in total taxable sales: $15,000 in 100 percent taxable sales and $10,000 in 33 percent taxable sales. This example uses a tax rate of 8.25 percent, but you must use the rate in effect where your machines are located. If you have vending machines in locations with different tax rates, you will need to complete separate worksheets for each rate and combine totals to prepare your return.

Example A. 100% taxable salesB. 33% taxable sales Total of A+B
round & carry to return line indicated
1. Gross sales including tax 15,000.00 10,000.00 25,000 to return-gross sales
2. Taxable sales factor (see above) × 92.3788% × 32.1254%  
3. Taxable receipts without tax (gross sales × taxable sales factor) 13,856.82 3,212.54  
4. Tax rate (use rate where machines are located) × 8.25% × 8.25%  
5. Tax included in sales (line 3 taxable receipts × line 4 tax rate) 1,143.19 265.03 1,408.22 to return-sales tax included
6. Tax exempt food sales (column B only; line 1 − line 3 − line 5) n/a 6,522.43
(10,000 − 3,212.54 − 265.03)
6,522.43 to return-sales of food products

Publications

18 Nonprofit Organizations

44 District Taxes

Regulations

1574 Vending Machine Operators

1602 Food Products

1603 Taxable Sales of Food Products