No U.S. state currently levies a sugar tax aimed at public health, but eight cities, Washington D.C., and the Navajo Nation all tax sugary drinks in some form. Four states have gone the other direction and passed laws blocking their cities from creating new ones. Here is where the states and cities with a sugar tax stand today, and how each version works.
Cities That Tax Sugary Drinks
Every active municipal sugar tax in the continental U.S. is an excise tax on distributors, charged per fluid ounce of sweetened beverage delivered into the city.
Berkeley, California was first, effective January 1, 2015, at one cent per ounce.1City of Berkeley. Berkeley’s Tax Ordinance Three other California cities followed in 2017 at the same one-cent rate: Albany, Oakland, and San Francisco.2Legislative Analyst’s Office. Taxation of Sugary Drinks Santa Cruz voters approved Measure Z in November 2024 at two cents per ounce, making it the newest city on the list.
Four cities outside California also have active taxes:
- Boulder, Colorado: two cents per ounce, effective July 1, 2017, with revenue directed to health promotion, wellness, and chronic disease prevention.3City of Boulder. Sugar Sweetened Beverage Tax
- Philadelphia, Pennsylvania: 1.5 cents per ounce, effective January 1, 2017. Philadelphia is unusual because the tax also covers artificially sweetened drinks like diet soda.4City of Philadelphia. Philadelphia Beverage Tax (PBT)
- Seattle, Washington: 1.75 cents per ounce, effective January 1, 2018. Seattle’s tax generated roughly $20 million in 2024.5Seattle.gov. What is the Sweetened Beverage Tax?
Washington, D.C.’s Soft Drink Sales Tax
The District of Columbia takes a different route. Instead of an excise tax on distributors, D.C. applies an 8% sales tax to soft drinks at the register, above the district’s standard 6% sales tax rate.6DC Office of the Chief Financial Officer. Tax Rates and Revenues, Sales and Use Taxes, Alcoholic Beverage Taxes, and Tobacco Taxes Like Philadelphia, D.C. taxes both sugar-sweetened and artificially sweetened drinks.
The Navajo Nation’s Junk Food Tax
The Navajo Nation has taxed sugary drinks since 2014 under the Healthy Diné Nation Act, but its scope is broader than a soda tax. The tax is 2% of the sale price on what the law calls “minimal-to-no nutritional value food,” which covers sweetened beverages along with candy, chips, pastries, and other snacks high in sugar, salt, or saturated fat.7Office of the Navajo Tax Commission. CN-54-14 Healthy Diné Nation Act of 2014 Because it uses a percentage rather than a per-ounce rate and includes food, it operates as a broad junk food tax rather than a beverage-specific measure.
States and Cities That Have Repealed Their Taxes
Cook County, Illinois, which includes Chicago, adopted a one-cent-per-ounce tax in August 2017 and repealed it four months later. Collection ended December 1, 2017.8Cook County Government. Statement from Cook County Board President Toni Preckwinkle on Sweetened Beverage Tax Repeal Vote
At the state level, West Virginia collected a soft drink excise tax for decades until the legislature passed Senate Bill 533 in 2022 to phase it out; collection ended July 1, 2024.9West Virginia Legislature. Senate Bill 533 Arkansas still charges a soft drink excise tax that has been on the books since 1992, at $1.26 per gallon of syrup and about 21 cents per gallon of bottled drinks, but it functions as a revenue measure rather than a public health tax.10Arkansas Department of Finance and Administration. Soft Drink Tax
States That Block Cities From Adding New Taxes
Four states have passed preemption laws that prohibit local governments from creating new sugar or grocery taxes: Arizona, California, Michigan, and Washington, all between 2017 and 2018.
California’s AB 1838, signed in June 2018, bars any local government from imposing new taxes on groceries (a category that includes beverages) through January 1, 2031.11California Legislative Information. AB 1838 Local Government – Taxation – Prohibition – Groceries The existing taxes in Berkeley, Albany, Oakland, and San Francisco were grandfathered. Santa Cruz was still able to pass its 2024 tax because it is a charter city, which gave it broader taxing authority than general-law cities.
Washington State’s Initiative 1634, approved by voters in November 2018, blocks local governments from taxing groceries, defined broadly to include any food or beverage for human consumption other than alcohol, cannabis, and tobacco.12Washington State Legislature. Chapter 82.84 RCW – Local Grocery Tax Restrictions Seattle’s tax was already in effect and was left alone. Arizona and Michigan passed their preemption laws before any city in either state had adopted a tax, so nothing needed grandfathering.
Who Actually Pays the Tax
In every jurisdiction except D.C., the tax is billed to the beverage distributor, not the customer.4City of Philadelphia. Philadelphia Beverage Tax (PBT) The cost still lands on shoppers, though. Research across multiple cities found retailers raised shelf prices by an average of about 1.3 cents per ounce after a one-cent tax took effect, passing roughly 92% of the cost through to consumers.
D.C. is the exception. Because the tax there is structured as a higher sales tax rate, shoppers see the charge printed on the receipt rather than baked into the shelf price.6DC Office of the Chief Financial Officer. Tax Rates and Revenues, Sales and Use Taxes, Alcoholic Beverage Taxes, and Tobacco Taxes
Every U.S. jurisdiction uses a flat rate regardless of how much sugar the drink contains. A lightly sweetened iced tea and a heavily sugared energy drink of the same size owe the same tax.
Common Exemptions
The specific list varies by city, but the pattern holds: drinks with real nutritional value or no added sweetener are generally left out.
- 100% fruit juice, because the sugars are naturally occurring.
- Milk and dairy-based drinks, including flavored milk and yogurt drinks.
- Unsweetened coffee and tea (sweetened versions are taxed).
- Infant formula, meal replacements, and medical beverages.
- Alcoholic beverages, which are taxed separately.
The biggest split is over artificially sweetened drinks. Most jurisdictions exempt diet sodas and zero-calorie beverages on the theory that the tax should target sugar. Philadelphia and D.C. tax them anyway.13City of Philadelphia. What is Subject to the PBT Philadelphia’s stated reason is that its tax was designed primarily to raise revenue, not to steer sweetener choices.
Where the Revenue Goes
Cities generally earmark sugar tax revenue for specific programs, and the earmark often helps sell the tax to voters.
Philadelphia projected roughly $91 million a year, most of it directed to publicly funded pre-kindergarten for low- and moderate-income families, with additional funding for community schools and parks and recreation improvements. That commitment was widely credited with getting the tax across the finish line after two earlier attempts failed.
Seattle’s tax brought in about $20.15 million in 2024, funding childcare assistance, food security, and early learning programs.14Seattle.gov. 2024 Q4 Year-End Revenue Report Boulder directs its revenue toward health promotion, chronic disease prevention, and programs for residents with low income.3City of Boulder. Sugar Sweetened Beverage Tax Berkeley generates around $1.15 million a year, which funds community nutrition and cooking programs.
Do These Taxes Change What People Drink?
Sales data suggests they do. Philadelphia saw sweetened drink sales drop by about 38% in the years after its tax took effect, one of the largest declines recorded. Berkeley’s early data showed a 21% decline in self-reported consumption of sugary beverages. Across cities studied, volume sales of taxed beverages fell by roughly a third after implementation.
Some of that drop reflects cross-border shopping, where residents drive to a neighboring city without the tax to stock up. Studies in Philadelphia and Seattle have measured that leakage; it exists but does not come close to erasing the in-city decline. Cook County’s short-lived tax produced an ambiguous result: sales fell while the tax was in effect and rebounded almost immediately after repeal, which suggests the behavior change lasts only as long as the tax does.