Obesity and diet‐related chronic disease are increasing problems worldwide. In response, many governments have enacted or are considering taxes on energy‐dense foods. Perhaps the most commonly recommended policy is a tax on sugar‐sweetened beverages (SSBs). This paper estimates the extent to which a tax on SSBs is passed through to consumers in the form of higher prices. We examine the first city‐level tax on SSBs in the United States, which was enacted by the voters of Berkeley, California, in November 2014. We collected the prices of various brands and sizes of SSBs and other beverages before and after the implementation of the tax from a near‐census of convenience stores and supermarkets in Berkeley, California. We also collected prices from stores in a control city: San Francisco, where a similar voter referendum failed despite majority support. Estimates from difference‐in‐differences models indicate that, across all brands and sizes of products examined, 43.1 percent (95 percent confidence interval: 27.7 to 58.4 percent) of the Berkeley tax was passed on to consumers. The estimates also are consistent with cross‐border shopping. For each mile of distance between the store and the closest store selling untaxed SSBs, pass‐through rose 33.3 percent for 2 L bottles and 25.8 percent for 12‐packs of 12 ounce cans.