Bill > HB540

This bill eliminates local sales and use taxes on food purchased for human consumption and essential personal hygiene products, effective July 1, 2024. The bill defines "food purchased for human consumption" based on the Food Stamp Act, excluding prepared foods and including seeds and plants that produce food. "Essential personal hygiene products" are defined as incontinence products like diapers and menstrual products like pads and tampons. To compensate localities for the lost tax revenue, the bill creates a supplemental school payment that will distribute funds to cities and counties based on their historical sales tax collections from these exempt items. From July 1, 2024, to July 1, 2026, the distribution will be based on each locality's estimated average monthly distributions from February 2022 to December 2023, and after July 1, 2026, it will be based on each locality's proportional share of collections. The bill also requires an annual review of these distributions beginning October 1, 2027, to ensure accuracy and make any necessary adjustments.