What Illinois sales tax rate applies to a soy-free, whole-food-based powdered shake mix?

Plain-English summary

A company asked the Illinois Department of Revenue, in a letter dated March 9, 2023, to review the product labels for its "COMPANY PRODUCT Soy-Free Whole Food Based Shake Mix" (described by the requester as a "whole foods" product) and provide a determination of Illinois sales taxability. Because the inquiry and the information provided called for a general response rather than a binding determination, the Department answered with a General Information Letter (GIL) rather than a Private Letter Ruling (PLR).

The Department's response walks through its "Food, Soft Drinks and Candy" regulation, 86 Ill. Adm. Code 130.310. Food intended for human consumption off the premises where it's sold -- other than alcoholic beverages, cannabis-infused food, soft drinks, candy, and food prepared for immediate consumption -- is taxed at the low state rate of 1% plus applicable local taxes, versus the general 6.25% state rate (plus local taxes) for candy, soft drinks, and food prepared for immediate consumption. The letter also flags a temporary change in effect at the time: from July 1, 2022 through June 30, 2023, the State of Illinois suspended its 1% state sales and use tax on grocery food items down to 0%, per Public Act 102-0700, though retailers in the Regional Transportation Authority or Metro-East Mass Transit District still owed an additional local tax on grocery food that was not suspended.

Applying the food, soft drink, and candy definitions, the Department explained that "food" means any solid, liquid, powder, or item intended by the seller primarily for human internal consumption -- expressly including condiments, spices, seasonings, vitamins, bottled water, and ice (86 Ill. Adm. Code 130.310(c)(1)). "Soft drinks" are non-alcoholic sweetened beverages, but exclude drinks containing milk or milk products, soy, rice or similar milk substitutes, or more than 50% vegetable or fruit juice by volume (35 ILCS 120/2-10; 86 Ill. Adm. Code 130.310(d)(6)(B)) -- and beverage powders and dry mixes are not considered soft drinks at all (86 Ill. Adm. Code 130.310(d)(6)(E)(i)). "Candy" means a sugar/honey/sweetener preparation combined with chocolate, fruit, nuts, or other ingredients in bar, drop, or piece form, excluding anything containing flour or requiring refrigeration (35 ILCS 120/2-10; 86 Ill. Adm. Code 130.310(d)(7)(A)) -- and powdered hot chocolate cocoa mix and other drink mixes are specifically not considered candy (86 Ill. Adm. Code 130.310(d)(7)(G)(vi)).

Because the product in question appeared to be a powder intended to be mixed with liquid, the Department concluded it would not be a soft drink or candy, and did not appear to be for immediate consumption. Based on that, the Department stated the product "may qualify for the lower 1% rate of tax on food" -- a qualified, non-binding conclusion consistent with the GIL format, which does not commit the Department the way a PLR would.

What this means for you

Makers and sellers of powdered food/beverage-mix products

If you sell a powder or dry mix intended to be combined with liquid before consumption (a shake mix, drink mix, hot cocoa mix, etc.), this GIL is a useful data point: the Department's own regulations exclude beverage powders and dry mixes from the "soft drink" definition (86 Ill. Adm. Code 130.310(d)(6)(E)(i)) and exclude powdered cocoa/drink mixes from the "candy" definition (86 Ill. Adm. Code 130.310(d)(7)(G)(vi)). That means such products are more likely to fall under the general "food" definition and its preferential 1% state rate rather than the 6.25% rate for candy or soft drinks -- but this letter only says the requester's specific product "may qualify," not that it definitely does, so you cannot rely on this GIL to protect your own company's tax position.

Grocers and retailers of food products generally

Remember the rate structure: food for off-premises consumption is taxed at the low 1% state rate plus local taxes, while candy, soft drinks, and food prepared for immediate consumption are taxed at the general 6.25% state rate plus local taxes. Also note the temporary rate change described in this letter -- the 1% state rate on grocery food was suspended to 0% from July 1, 2022 through June 30, 2023 under Public Act 102-0700, though local taxes (including the Regional Transportation Authority and Metro-East Mass Transit District add-on) still applied during that window. Because that suspension period has since ended, confirm the current state rate before relying on this letter for today's transactions.

Accountants and tax professionals

This GIL is a compact primer on the three-way food/soft-drink/candy classification framework in 86 Ill. Adm. Code 130.310, including the often-overlooked carve-outs that exempt beverage powders and dry mixes from both the "soft drink" and "candy" definitions. Because it is a GIL, it is not a statement of Department policy and is not binding -- a client needing a definitive, binding answer on their own product's classification should request a PLR under 2 Ill. Adm. Code 1200.110.

Common questions

Q: What Illinois sales tax rate applies to food?
A: Food intended for human consumption off the premises where it is sold -- other than alcoholic beverages, cannabis-infused food, soft drinks, candy, and food prepared for immediate consumption -- is taxed at the low state rate of 1% plus applicable local taxes. Candy, soft drinks, and food prepared for immediate consumption are taxed at the general 6.25% state rate plus applicable local taxes. See 86 Ill. Adm. Code 130.310.

Q: Does this GIL say the shake mix powder is definitely taxed at the 1% food rate?
A: Not definitively. The Department stated the product "may qualify for the lower 1% rate of tax on food" based on it being a powder intended to be mixed with liquid, not a soft drink or candy, and not for immediate consumption -- but a GIL is not binding on the Department, even for the requester.

Q: Are beverage powders and drink mixes taxed as "soft drinks" or "candy"?
A: No. Beverage powders and dry mixes are excluded from the "soft drink" definition (86 Ill. Adm. Code 130.310(d)(6)(E)(i)), and powdered hot chocolate cocoa mix and other drink mixes are excluded from the "candy" definition (86 Ill. Adm. Code 130.310(d)(7)(G)(vi)).

Q: Was there a temporary tax break on groceries mentioned in this letter?
A: Yes. The letter notes that from July 1, 2022 through June 30, 2023, Illinois suspended its 1% state sales and use tax on grocery food items normally taxed at that low rate, reducing it to 0% under Public Act 102-0700 -- though additional local taxes in the Regional Transportation Authority or Metro-East Mass Transit District were not suspended.

Q: How does "soft drink" differ from "food" for tax purposes?
A: "Soft drinks" are non-alcoholic beverages containing natural or artificial sweeteners, but the definition excludes beverages containing milk or milk products, soy, rice or similar milk substitutes, or more than 50% vegetable or fruit juice by volume -- those beverages are taxed as food instead. See 35 ILCS 120/2-10 and 86 Ill. Adm. Code 130.310(d)(6)(B).

Citations and references

Regulations:

• 86 Ill. Adm. Code 130.310 (tax rate applicable to sales of food; definitions of food, soft drinks, and candy)
• 86 Ill. Adm. Code 130.310(c)(1) (definition of food)
• 86 Ill. Adm. Code 130.310(d)(6)(B) (definition of soft drinks)
• 86 Ill. Adm. Code 130.310(d)(6)(E)(i) (beverage powders and dry mixes not considered soft drinks)
• 86 Ill. Adm. Code 130.310(d)(7)(A) (definition of candy)
• 86 Ill. Adm. Code 130.310(d)(7)(G)(vi) (powdered cocoa mix and other drink mixes not considered candy)
• 86 Ill. Adm. Code 130.310(b) (tax impact depends on nature of selling establishment)

Statutes:

• 35 ILCS 120/2-10 (Retailers' Occupation Tax Act definitions, including soft drinks and candy)
• Public Act 102-0700 (temporary suspension of the 1% grocery tax rate to 0%, July 1, 2022 - June 30, 2023)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2023.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2023/ST-23-0012-GIL.pdf

Original ruling text

ST-23-0012-GIL 05/09/2023 FOOD
This letter discusses the State tax rate applicable to the sales of food. See 86 Ill.
Adm. Code 130.310. (This is a GIL.)
May 09, 2023

NAME
ADDRESS
Dear NAME:
This letter is in response to your letter dated March 09, 2023, in which you
requested information. The Department issues two types of letter rulings. Private Letter
Rulings (“PLRs”) are issued by the Department in response to specific taxpayer
inquiries concerning the application of a tax statute or rule to a particular fact situation.
A PLR is binding on the Department, but only as to the taxpayer who is the subject of
the request for ruling and only to the extent the facts recited in the PLR are correct and
complete. Persons seeking PLRs must comply with the procedures for PLRs found in
the Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General
Information Letter (“GIL”) is to direct taxpayers to Department regulations or other
sources of information regarding the topic about which they have inquired. A GIL is not
a statement of Department policy and is not binding on the Department. See 2 Ill. Adm.
Code 1200.120. You may access our website at www.tax.illinois.gov to review
regulations, letter rulings and other types of information relevant to your inquiry.
The nature of your inquiry and the information you have provided require that we
respond with a GIL. In your letter you have stated and made inquiry as follows:
Please review the enclosed product labels for the item listed below and
provide us with a determination of sales taxability in your state. Please
note that this product is categorized as whole foods.
Product:

COMPANY PRODUCT Soy-Free Whole Food Based Shake

Mix
I will be happy to provide additional information if needed. Thank you for
your prompt attention to this matter.
My email address is ADDRESS and that is the best way to respond.
DEPARTMENT’S RESPONSE:
Please see the Department’s Regulation entitled “Food, Soft Drinks and Candy”
at 86 Ill. Adm. Code 130.310 which can be found on the Department’s website. As you
can see in the regulation, food for human consumption that is to be consumed off the

COMPANY/NAME
Page 2
May 09, 2023
premises where it is sold (other than alcoholic beverages, food consisting of or infused
with adult use cannabis, soft drinks, candy and food that has been prepared for
immediate consumption) is taxed at the lower state tax rate of 1% plus applicable local
taxes. In contrast, candy, soft drinks and food that has been prepared for immediate
consumption are taxed at the higher state sales tax rate of 6.25% plus applicable local
taxes. From July 1, 2022, through June 30, 2023, the State of Illinois sales and use tax
on grocery food items normally taxed at the one percent (1%) low rate will be zero
percent (0%). However, if the retailer is located within the Regional Transportation
Authority or Metro-East Mass Transit District, there is an additional local tax on grocery
food that is not suspended. See Public Acts 102-0700; see also FY 2022-23.
The regulation defines “food” as any solid, liquid, powder or item intended by the
seller primarily for human internal consumption, whether simple, compound or mixed,
including foods such as condiments, spices, seasonings, vitamins, bottled water and
ice. 86 Ill. Adm. Code 130.310(c)(1).
The term “soft drinks” means non-alcoholic beverages that contain natural or
artificial sweeteners. “Soft drinks” do not include beverages that contain milk or milk
products, soy, rice or similar milk substitutes, or greater than 50% of vegetable or fruit
juice by volume. 35 ILCS 120/2-10; 86 Ill. Adm. Code 130.310(d)(6)(B). Thus, if a
beverage contains a natural or artificial sweetener but also contains milk or milk
products, soy, rice, or similar milk substitutes, or greater than 50% of vegetable or fruit
juice by volume, it would not fall within the definition of “soft drink” but, rather, it would
fall within the definition of food.
“Candy” is defined as a preparation of sugar, honey, or other natural or artificial
sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings
in the form of bars, drops, or pieces. “Candy” does not include any preparation that
contains flour or requires refrigeration. Thus, if a product contains flour or requires
refrigeration, it would not be considered “candy” even if it meets all the other elements
of the definition. 35 ILCS 120/2-10; 86 Ill. Adm. Code 130.310(d)(7)(A).
Please be aware that the tax can also be impacted by the nature of your selling
establishment. Please see 86 Il. Adm. Code 130.310(b). It appears that the products
stated in your inquiry may be a powder which is intended to be mixed with liquid.
Beverage powders and dry mixes are not considered soft drinks. See 86 Ill. Adm. Code
130.310(d)(6)(E)(i). Powdered hot chocolate cocoa mix and other drink mixes are not
considered candy. See 86 Ill. Adm. Code 130.310(d)(7)(G)(vi). Therefore, this product
would not be a soft drink or candy. This product also does not appear to be for
immediate consumption. Based on this information, it appears that this product may
qualify for the lower 1% rate of tax on food.
I hope this information is helpful. If you require additional information, please
visit our website at www.tax.illinois.gov or contact the Department’s Taxpayer
Information Division at (217) 782-3336.

COMPANY/NAME
Page 3
May 09, 2023

Very truly yours,

Alexis K. Overstreet
Deputy General Counsel
Sales and Excise Tax Policy

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