As of 2010, SNAP benefits are not taxable on your federal tax return, and grocery purchases are not subject to sales tax, according to the Department of Health and Human Services. Also, SNAP benefits cannot affect your eligibility for other public assistance programs, such as subsidized health care. Some social assistance programs, however, may use the eligibility for a food stamp program to lower the amount of benefits for which you are eligible.
Other Benefits May Be Taxable
Other benefits from the state may be taxable. Unemployment benefits, for instance, are taxable. In 2009 and 2010, the federal government declared the first $2,400 of unemployment benefits as nontaxable income. You will receive a 1099G if you have a taxable benefit from the federal government.
You will have to pay sales tax on items not eligible for the SNAP program, regardless of your state's law on which grocery items are taxable, according to the Ohio Grocers Association. Items that do not qualify for SNAP are those deemed to have no nutritional value, such as alcohol and inedible items.
Tax Return Effects on Food Stamps
Eligibility for the food stamp program is affected by your tax return. Your net income for the previous year cannot exceed 100 percent of the poverty line -- $1,721 per month in 2008, according the Organisation for Economic Co-operation and Development. Your net income includes most wages and benefits, such as Temporary Assistance for Needy Families. The Earned Income Tax Credit, aimed at low-income families, does not count as income.
Taxpayers have the option of deducting state and local taxes on their federal return or state and local sales tax. You could reduce your grocery bills further by deducting SNAP-ineligible items on Schedule A on your 1040.