Food and Beverage Tax History

September 19, 2016

Did you recently eat out with friends or family? Depending on the location of the restaurant, you may have noticed an additional tax on your meal.

In Indiana, a food and beverage tax (FAB) is applied to any transaction in which food or beverage is furnished, prepared, or served for consumption.The FAB is charged at the same time as sales tax.

A FAB has existed for approximately 35 years in the state of Indiana. The first FAB in Indiana was enacted for Marion County in 1981 and was set at 1% of the sale price. The primary purpose of the FAB was to fund the construction of the Hoosier Dome and Indianapolis Convention Center. Today, Marion County still has a FAB.

Between the years of 1985 and 1989, legislation allowed for FABs in additional counties, which include Allen (1986), Delaware (1986), Henry (1987), and Vanderburgh (1985).

In addition to a FAB that applies to an entire county, cities and towns may adopt and enact their own FABs. For example, Mooresville and Shipshewana enacted a FAB in 1990, Brownsburg and Plainfield in 1995, and Avon and Martinsville in 2005. To find a full list of municipalities that have enacted a FAB, click here.

In order to fund the Lucas Oil Stadium, the General Assembly in 2005 authorized Marion County to increase its FAB to 2% of the sale price. Boone, Hamilton, Hancock, Hendricks, Johnson, and Shelby counties enacted FABs as part of the same legislation. In addition, Carmel, Lebanon, Noblesville, Westfield, and Zionsville also enacted FABs. 

In more recent history, Cloverdale enacted a FAB in 2013 and Rockville in 2015. Also, the 2015 General Assembly authorized a FAB applicable to the French Lick Casino and Resort, which is the first and only FAB authorized for an area, rather than a county or municipality.

Next time you eat at a restaurant make note of your location; you may be paying a FAB!

For more information on Indiana’s FAB, click here.