The state of Oklahoma is set to abolish its 4.5 percent tax on groceries on Thursday.

But that doesn’t mean food sales will be completely tax-free. City and county taxes, such as the City of Tulsa’s 3.65% sales tax, will still be collected. They’re important because they make up more than a third of the city’s annual revenue, according to the city’s fiscal year 2024-25 budget, and help fund essential services like police protection and street maintenance.

Tulsa County charges a sales tax of 0.367%.

But consumers will undoubtedly see savings. If a family normally spends $1,000 a month on groceries, they should save about $540 in the coming year.

The state tax will not be eliminated on everything sold in a grocery store. For example, it will still be imposed on the purchase of drugs or nutritional supplements found in the pharmacy section. It will still be imposed on the sale of tobacco products, six-packs of beer, or bottles of wine. The tax will also still be imposed on the purchase of things like ready-to-eat deli chicken or grab-and-go pasta salad. A cake baked in a bakery in the grocery store will still be subject to the state tax, but a cake baked and packaged by an outside supplier and delivered ready to ship from the frozen food section will not be subject to the state tax.

Emily Haxton, spokeswoman for the Oklahoma Tax Commission, said the state sales tax will be eliminated in the broad categories of “food and food ingredients,” but it will continue to be charged on “prepared foods.”

“If the product is made in the grocery store, it is not exempt, but if it is made by a branded food manufacturer, it is exempt,” she said.

To help consumers understand how the tax break will affect them and to help businesses prepare for the change, the Oklahoma Tax Commission has updated its website with a comprehensive guide, which also includes a short video and answers to frequently asked questions.

For some businesses, such as food trucks, that sell both prepared meals and supermarket-style packaged foods, such as those that sell ready-to-eat sandwiches along with bags of chips and bottles of soda, a formula may be applied. According to the Tax Commission’s guide, if prepared meals account for 75% or more of a business’s total sales, all food sold is taxable as prepared meals, with the exception of the sale of larger packages containing four or more servings.

At Braum’s Ice Cream and Dairy Stores, public relations director Amanda Beuchaw said the company has a system in place that allows it to quickly adapt to any changes in local or state tax rates.

“Each state provides regular updates on upcoming sales tax changes,” she said in an email. “We monitor these changes for those that impact the sales tax rate we collect based on location and changes in product tax liability.”

Beuchaw said Braum’s maintains a database of products available in its stores as well as the associated tax liability of each product.

“Our systems allow us to change sales tax based on location and product,” she said. “We are handling this (Oklahoma-wide) change the same way we handle more routine tax changes, but more locations are affected than usual.”

Beuchaw said the state has issued extensive guidance to help businesses identify products that it defines as food and that qualify for the reduced sales tax rate.

When Governor Kevin Stitt signed House Bill 1955 on February 28, eliminating the state grocery tax, he called it the largest single-year tax cut in Oklahoma history.

According to a report by financial magazine Kiplinger, Oklahoma was one of only 13 states to impose a tax on food sales in recent years, although some states provided tax breaks for low-income consumers. In Oklahoma, for example, groceries paid for with food stamps were exempt from the tax.