Tennessee's sales tax on groceries will drop from 5.25 percent to 5 percent.
Governor Bill Haslam was in Monroe County for a ceremonial bill signing at Sloan's Grocery in Vonore, Tennessee.
The bill is one of two tax cuts passed by the legislature and signed by Governor Haslam this year.
There is $23 million in next year's state budget to fund the legislation. The lower rate goes into effect July 1, 2013.
It does not apply to prepared foods such as a meal at a restaurant, candy, alcoholic beverages or tobacco.