Tennessee Governor Bill Haslam signed the last step in a two-year effort to reduce the state's portion of groceries sales tax from 5.25 percent to 5 percent.
Haslam signed the bill at Solan's Grocery in Vonore on Monday.
"We're lowering taxes and balancing the state budget by managing conservatively, making strategic investments in our priorities and finding new ways to make government more efficient and effective," Haslam said in a statement. "The sales tax on food impacts all Tennesseans, and I applaud the General Assembly for passing this important piece of legislation this year."
The General Assembly passed the first step in 2012, reducing the state portion of the sales tax on groceries and lowering the rate from 5.5 percent to 5.25 percent.
Governor Haslam introduced the bill, and it was one of two tax cuts passed by the legislature and signed by Haslam this year.
Senate Majority Leader Mark Norris (R-Collierville), House Majority Leader Gerald McCormick (R-Chattanooga) and State Rep. Ryan Haynes (R-Knoxville) sponsored the bill.
Haslam included $23 million in the 2013-2014 budget to fund the legislation, and it goes into effect July 1.
The reduced tax rate doesn't apply to prepared foods like at a restaurant, candy, alcoholic beverages or tobacco.