House Bill 1032 would remove groceries and other food items from North Carolina’s local sales and use tax base. The bill amends multiple statutes governing county-authorized local sales taxes so that food exempt from the State sales tax would also be exempt from local taxes, including bundled transactions that contain food in certain circumstances. It also updates ballot language for county referenda on local sales taxes, revises administration and distribution rules for food-tax proceeds, and repeals a provision in the State food-tax statute that currently allows local taxation of food.
The bill is structured to apply statewide to local sales taxes already authorized under several different articles of Chapter 105, while preserving existing rules for non-food taxable items. It also makes conforming changes to how the Secretary of Revenue collects, allocates, and distributes local food-tax revenue, including special treatment for Mecklenburg County and its municipalities under older local tax laws. The act would take effect October 1, 2026, and would apply to sales made on or after that date.
HB1032 would significantly narrow the taxable base for county and certain local sales taxes by exempting groceries and food from local taxation. This would reduce local tax collections tied to food purchases and require conforming changes across the statutes governing local sales and use taxes, county referendum procedures, refund rules, and revenue distribution formulas. It would also repeal G.S. 105-164.13B(b), eliminating the statutory basis for local taxation of food under the State’s food-tax framework, while leaving local taxes on other taxable goods and services intact.
No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or formal support/opposition in the available record. Based on the bill’s title and text, the measure appears to be a consumer-tax relief proposal aimed at lowering the cost of groceries, which would likely be viewed favorably by taxpayers and food purchasers. At the same time, local governments that rely on sales-tax revenue would likely view it negatively because it would reduce local revenue collections.
The main point of contention is the fiscal impact on counties and municipalities, which would lose local sales-tax revenue from food purchases. Supporters are likely to emphasize grocery affordability and tax relief, while opponents are likely to focus on the loss of local revenue and the need to replace funds used for county and municipal services. A secondary issue is the complexity of conforming changes to existing local tax statutes and distribution formulas, including special provisions for Mecklenburg County and bundled transactions involving food.