Food Insecurity and the Impact of Grocery Taxes in the U.S.

Americans often perceive hunger as an issue predominantly affecting countries far from their borders, imagining scenes of failed harvests and refugee camps. Yet the reality in the U.S. is starkly different. Data from the USDA reveals that around 14 percent of U.S. households face food insecurity. One in five children live in homes where access to adequate nutrition is uncertain. This illustrates that hunger is not solely a foreign problem but a pressing American issue.

The causes of this domestic hunger crisis are clear. Rising housing costs, stagnant wages, and increased prices for gasoline, utilities, and food strain family budgets. Many families must choose between essentials such as rent and groceries. Yet, one less-discussed factor contributing to food insecurity is grocery taxes. Although most states do not tax groceries viewing them as a necessity, nine states still impose grocery taxes, with total rates in some areas reaching nearly 9 percent.

Research shows that even small increases in grocery taxes escalate food insecurity risks. A mere 1 percentage point rise in grocery taxes can increase the likelihood of food insecurity among low-income households by almost 1 percent. The conclusion is obvious: grocery taxes exacerbate hunger. These taxes are regressive, impacting poorer households more heavily, thus burdening those most at risk of hunger.

Moreover, research indicates retailers may overly increase prices due to grocery taxes—raising costs more than the tax itself. This is prevalent in discount stores frequented by low-income shoppers. Despite the intention to raise revenue, grocery taxes might inadvertently magnify hunger.

Grocery taxes are not the main cause of food insecurity in the U.S. However, they directly impact families’ purchasing decisions. Unlike broad economic issues, state governments can immediately eliminate these taxes. Replacing lost revenue with more progressive tax systems, property taxes, or targeted levies on non-essential items would be less harmful to struggling families.

A concerned society should not fund public services by increasing food costs for those least able to afford them. Taxing groceries appears administratively simple but shifts the financial burden onto vulnerable individuals, potentially worsening the nation’s hunger issue. Hunger in America results from choices, including the decision to tax essential food items.

Harry M. Kaiser is the Gellert Family Professor of Applied Economics and Management at Cornell University.