Is manufactured brine water (made by pumping fresh water into an underground salt formation) exempt from Texas sales tax the same way plain water and table salt are exempt, and is non-food salt like rock salt or ice cream salt taxable?

Subject

Brine Water Made From Fresh Water Pumped Into A Salt Formation Is Taxable As Processed Water; Table Salt Exempt As Food But Rock/Ice Cream Salt Taxable

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9311087L

Plain-English Summary

A taxpayer's vendor makes brine water by pumping fresh water into an underground salt formation. The water dissolves salt as it sits, becomes saturated, and is then pumped out and held in a lined pit or storage tank until it is sold. The taxpayer argued that because fresh water is exempt from sales tax and salt is exempt from sales tax, brine water — which is just the two combined through a "simple chemical reaction" — should also be exempt.

The Comptroller rejected that argument. The letter explains that brine water created this way is processed water, not naturally occurring brine water, and cites a prior Administrative Hearing (No. 491, 1963) that upheld this same treatment. Because it is processed, both the brine water itself and the charges for transporting it from the vendor are taxable.

The letter separately clarifies the taxability of salt itself: table or common salt is exempt from sales tax because it is a food item. Other kinds of salt — the letter names rock salt, ice cream salt, and grain salt as well as Epsom salts — are taxable. The general rule stated is that if there's no evidence the substance is a food product intended for human consumption, it is taxable.

What This Means For You

If you sell or buy manufactured brine water in Texas: Don't assume that combining two exempt ingredients (fresh water and table salt) automatically produces an exempt product. This letter treats the manufacturing process itself — pumping water into a salt formation to create saturated brine — as turning the water into a taxable, processed product, distinct from brine that occurs naturally. Transportation charges tied to that taxable brine water are taxable too.

If you sell salt products: Whether a particular salt product is taxed turns on whether it's a food item for human consumption. Table or common salt sold as food is exempt. Industrial or non-food salts — the letter specifically flags rock salt, ice cream salt, grain salt, and Epsom salts — are taxable absent evidence the buyer is using it as human food.

Note on scope: This letter cites no Texas statute or administrative rule by number; its only cited authority is an internal Comptroller precedent, Administrative Hearing No. 491 (1963). It is based solely on the facts as described by the taxpayer, and the Comptroller notes the opinion could change if the facts are different.

Q&A

Q: If fresh water and table salt are each exempt, why is the brine water made from them taxable?
A: Because the brine water isn't just a combination of two exempt items sitting side by side — it's created through a process (pumping fresh water into a salt formation to dissolve and saturate it with salt) that the Comptroller classifies as making a new, processed product rather than naturally occurring brine. That processing is what makes it taxable, per the reasoning upheld in Administrative Hearing No. 491 (1963).

Q: Is naturally occurring brine water treated the same way?
A: The letter distinguishes "processed" brine water (made by pumping fresh water into a salt formation) from "naturally occurring" brine water, implying the two are not treated identically, though the letter does not describe the tax treatment of naturally occurring brine in any further detail.

Q: Are transportation charges for the brine water taxable too?
A: Yes — the letter states that "the charges for the brine water and associated transportation are taxable."

Q: Is all salt exempt from Texas sales tax?
A: No. Table or common salt is exempt because it's a food item. Other types — rock salt, ice cream salt, grain salt, and Epsom salts are given as examples — are taxable unless there's evidence the substance is a food product intended for human consumption.

Original ruling text

November 16, 1993

Dear **:

Thank you for your letter of November 4, 1993, concerning the taxability of
brine water.

Your vendor creates brine water by pumping fresh water into an underground salt
formation. The water becomes saturated with salt and is removed and placed in
either a lined pit or storage tank until sold.

You are requesting a ruling on whether the resulting brine water and associated
transportation from the vendor are exempt or taxable. You have stated that
fresh water is exempt and salt is exempt, so the resulting combination through
simple chemical reaction should be exempt.

Brine water created by pumping fresh water through salt domes or formations is
considered processed and not naturally occurring brine water. This treatment
was upheld in enclosed Administrative Hearing No. 491 (1963). The charges for
the brine water and associated transportation are taxable.

I also need to clarify the taxability of salt. Table or common salt is exempt
from sales tax as a food item. Other types of salt, including rock or ice cream
salt, grain salt, Epson salts, etc.., are taxable. If there is no evidence to
indicate that the substance in question is a food product intended for human
consumption, it is taxable.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

You may call me toll free at 1-800-531-5441, ext. 5-0613. The direct line is
512/475-0613. You may also write to Tax Administration Division, Comptroller of
Public Accounts.

Sincerely,

Kevin Koller
Tax Administration Division