House Bill 884 would change North Carolina’s sales tax exemption for food by expanding the special exemption for artisan bakeries. Under current law, prepared food is generally taxable, but bakery items sold without eating utensils by an artisan bakery are exempt if the bakery derives more than 80% of its gross receipts from bakery items and its annual gross receipts, together with related persons, do not exceed $1.8 million. HB884 raises that gross receipts cap to $2.4 million.
The bill also keeps the existing definition of bakery items, which includes products such as bread, rolls, pastries, donuts, cakes, pies, muffins, cookies, and tortillas. The measure would take effect October 1, 2025, and apply to sales made on or after that date. It does not change the broader food tax structure beyond this targeted exemption adjustment.
HB884 would amend G.S. 105-164.13B, North Carolina’s food tax exemption statute, by increasing the revenue threshold for artisan bakeries that qualify for the prepared-food sales tax exemption. As a result, more bakeries with annual gross receipts up to $2.4 million, including related persons, could sell qualifying bakery items without charging state sales tax, provided they meet the 80% bakery-item revenue test and the items are sold without eating utensils. The bill would also continue the Department of Revenue’s administration of local food taxes in the same manner as state food taxes, but it does not otherwise alter local tax authority or the general tax treatment of food.
The available legislative record shows limited formal debate, with no committee transcript or recorded votes provided. Based on the bill’s narrow scope and sponsor list, the measure appears to be a targeted tax relief proposal for artisan bakeries rather than a broad tax overhaul. The referral to the House Finance Committee suggests it was being considered as a revenue and tax policy matter, but there is no evidence in the provided materials of strong opposition or support expressed on the record.
The main point of contention is likely the higher gross receipts threshold and its fiscal effect: supporters would view the change as helping growing artisan bakeries remain eligible for the exemption, while critics could argue it narrows the tax base and extends a sales tax preference to larger businesses. Another possible issue is line-drawing—whether the $2.4 million cap appropriately distinguishes small artisan bakeries from larger commercial operations. No specific objections or competing arguments are documented in the provided transcripts or votes.