What Illinois sales tax rate applies to a human/veterinary product marketed as a probiotic 'medical food,' and how does the state tell a 1% low-rate medicine or food apart from a 6.25% general-merchandise sale?

Plain-English summary

A business asked the Illinois Department of Revenue to confirm the sales tax rate on a human-and-veterinary product sold in various strengths, mostly without a prescription. A customer had told the seller its 6.25% charge was wrong and that the product should instead be taxed at 2.25% (a 1% state rate plus local add-ons). The product's label describes it as "a high potency probiotic medical food intended for the dietary management of dysbiosis associated with irritable bowel syndrome (IBS), antibiotic-associated diarrhea, and hepatic encephalopathy (HE)," without naming a specific disease it treats.

The Department explained the general framework first: the Retailers' Occupation Tax Act imposes a 6.25% rate on gross receipts from most retail sales of tangible personal property, unless a lower rate applies under Section 2-10 of the Act. Medicines that a veterinarian prescribes for animals are taxed at the high 6.25% rate. But drugs and both prescription and nonprescription medicines for human use are taxed at the low 1% rate — and a product counts as a "medicine or drug" if its label makes a written claim that it cures or treats disease, illness, injury, or pain, or mitigates the symptoms of any of those. The letter lists many examples of qualifying label language, from "medicated" and "cures (a medical condition)" to "relief from poison ivy or poison oak" and "soothes pain."

Separately, food for human consumption eaten off the premises where it is sold is also taxed at 1% (with carve-outs for alcohol, cannabis-infused food, soft drinks, and food prepared for immediate consumption). Illinois defines "food" broadly to include any solid, liquid, powder, or item meant primarily for human internal consumption — including things like vitamins, supplements, and meal-replacement drink mixes, unless those items themselves make a medicinal label claim, in which case they're treated as drugs instead.

Applying this framework, the Department told the taxpayer that if its product meets the definition of a medicine or drug under 86 Ill. Adm. Code 130.311(c), it qualifies for the 1% rate. Alternatively, even if it isn't a "medicine," the product could still qualify for the 1% rate as food for human consumption sold for off-premises use. Either way, the Department's answer pointed toward 1%, not the 6.25% the company had been charging — though it left the final characterization to the facts of the taxpayer's own label and product.

What this means for you

Grocers and food retailers

If you sell vitamins, supplements, meal-replacement drink mixes, or similar products, check the label first. If the label makes no medicinal claim (no statement that it cures, treats, or relieves a disease or symptom), the item is generally just "food" under 86 Ill. Adm. Code 130.310 and taxed at 1% when sold for off-premises consumption. If the label does make a medicinal claim, the same product shifts into "drug or medicine" territory under 130.311(c) — still taxed at 1%, but for a different legal reason, which matters if you're also selling hot or prepared food subject to the higher rate.

Pharmacies and sellers of over-the-counter health products

The letter confirms that nonprescription human medicines are eligible for the 1% rate as long as the label carries a medicinal claim — you don't need a prescription requirement to get the low rate. The GIL's list of qualifying label phrases (e.g., "heals," "cures," "fights infection," "relief from," "soothes pain") is a useful checklist for classifying borderline over-the-counter items. Remember the flip side: medicines a veterinarian prescribes for animals get the high 6.25% rate, not the low rate, even though human medicines with similar labeling qualify for 1%.

Accountants and tax professionals

When a client's product sits at the boundary between "food," "drug/medicine," and ordinary tangible personal property, this GIL shows the Department's actual analytical order: first check whether it's a veterinarian-prescribed animal medicine (6.25%), then whether the label makes a medicinal claim under 130.311(c) (1%), and only if neither applies, whether it separately qualifies as food under 130.310 (also 1%, if sold for off-premises consumption and not otherwise excluded). Note the Department expressly said the product here could qualify for 1% under either theory — it didn't have to pick one — which is useful precedent language when advising clients on similar dual-characterization products.

Common questions

Q: My product doesn't name a specific disease on the label — can it still get the 1% medicine rate?
A: Possibly. The GIL notes the taxpayer's label didn't name a specific disease but did state the product was "intended for the dietary management of" specific conditions (IBS, antibiotic-associated diarrhea, hepatic encephalopathy). The Department did not require a named disease — a written claim that the product treats, cures, or mitigates symptoms of an illness, injury, or pain is enough under 86 Ill. Adm. Code 130.311(c).

Q: Do vitamins and supplements automatically get the low 1% rate?
A: Not automatically as "medicine." The GIL states that if vitamins, food supplements, or meal-replacement drink mixes purport on the label to have medicinal qualities, they're treated as drugs at 1%. If they don't make such a claim (which the letter notes is the more common case), they're instead treated as food under 130.310 — which is also generally 1% for off-premises consumption, per ST 18-0030-GIL, referenced in this letter.

Q: Why would a veterinary product be taxed differently from a human product?
A: The GIL draws a sharp line: medicines prescribed by a veterinarian for animals are taxed at the high 6.25% rate under 86 Ill. Adm. Code 130.311(c), while drugs and prescription/nonprescription medicines for human use are taxed at the low 1% rate under 35 ILCS 120/2-10. A single product line marketed for both human and veterinary use may need to be classified separately depending on which use applies.

Q: Is this letter binding on the Department?
A: No. This is a General Information Letter (GIL), not a Private Letter Ruling. Under 2 Ill. Adm. Code 1200.120, a GIL only directs the taxpayer to relevant regulations and other information; it is not a statement of Department policy and does not bind the Department, even as to the taxpayer who requested it.

Q: What tax rate applies if a product doesn't qualify as either food or medicine?
A: The letter doesn't address that scenario directly, but it confirms the default backdrop: the Retailers' Occupation Tax Act imposes a 6.25% rate on gross receipts from sales of tangible personal property generally, unless Section 2-10 specifies a lower rate for the item.

Citations and references

Statutes and regulations:

• 35 ILCS 120/2-10 (Retailers' Occupation Tax Act — general 6.25% rate and low-rate items, including drugs, medicines, and food)
• 86 Ill. Adm. Code 130.310(c)(1) (definition of "food" for the 1% rate)
• 86 Ill. Adm. Code 130.311(c) (definition of "medicine or drug," medicinal-claim standard, and high rate for veterinarian-prescribed animal medicines)
• 86 Ill. Adm. Code 130.311(c)(1) (non-exhaustive list of qualifying medicinal label claims)
• 2 Ill. Adm. Code 1200.110 (Private Letter Ruling procedures, referenced for context)
• 2 Ill. Adm. Code 1200.120 (General Information Letter status and non-binding effect)

Related guidance cited in the letter:

• ST 18-0030-GIL (prior GIL on food/supplement classification, referenced as supporting authority)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2024.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2024/ST24-0023-GIL.pdf

Original ruling text

ST 24-0023-GIL 06/04/2024 FOOD and MEDICINE
This letter discusses the State tax rate applicable to sales of food and medicine.
35 ILCS 120/2-10; 86 Ill. Adm. Code 130.310, 311. (This is a GIL.)
June 4, 2024
COMPANY
NAME
ADDRESS
Dear NAME:
This letter is in response to your email dated May 9, 2024, 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. 2 Ill. Adm.
Code 1200.120. You may access our website at https://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:
We have been selling products in Illinois for several years now. A few
weeks ago, one of our customers stated that our tax rate charged (6.25%)
is incorrect. Per the customer, our product should be taxed at 2.25% (1%
state plus local). I am trying to confirm the appropriate tax rate for our
human and veterinary product. Our product comes in various strengths
and all but one are non-prescription. It was my understanding that
products that do not have a Supplemental facts or Drug facts panel do not
receive the lower tax rate treatment. Although our product does not
specifically list a disease that it treats, our product labeling states
“PRODUCT is a high potency probiotic medical food intended for the
dietary management of dysbiosis associated with irritable bowel syndrome
(IBS), antibiotic-associated diarrhea, and hepatic encephalopathy (HE)”.
Would this qualify for 1% tax treatment?
DEPARTMENT’S RESPONSE:
The Retailers’ Occupation Tax Act (“Act”) imposes a tax rate of 6.25% on gross
receipts from sales of tangible personal property made in the course of business,
unless otherwise specified in Section 2-10 of the Act. 35 ILCS 120/2-10. Medicines

COMPANY
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June 4, 2024
prescribed by veterinarians for animals are subject to the high rate of tax. 86 Ill. Adm.
Code 130.311(c).
With respect to drugs and prescription and nonprescription medicines, the tax is
imposed at the rate of 1%. 35 ILCS 120/2-10. A medicine or drug is any pill, powder,
potion, salve, or other preparation for human use that purports on the label to have
medicinal qualities. A written claim on the label that a product is intended to cure or
treat disease, illness, injury, or pain or to mitigate the symptoms of such disease,
illness, injury, or pain constitutes a medicinal claim. 86 Ill. Adm. Code 130.311(c).
Examples of medicinal claims that will qualify the product for the low rate of tax
include, but are not limited to:
A)

“medicated”;

B)

“heals (a medical condition)”;

C)

“cures (a medical condition)”;

D)

“for relief (of a medical condition)”;

E)

“fights infection”;

F)

“stops pain”;

G)

“relief from poison ivy or poison oak”;

H)

“relieves itching, cracking, burning”;

I)

“a soaking aid for sprains and bruises”;

J)

“relieves muscular aches and pains”;

K)

“cures athlete’s foot”;

L)

“relieves skin irritation, chafing, heat rash, and diaper rash”;

M)

“relief from the pain of sunburn”; and

N)

“soothes pain”. 86 Ill. Adm. Code 130.311(c)(1).

The 1% tax rate is also imposed with respect to food for human consumption that
is to be consumed off the premises where it is sold (other than alcoholic beverages,
food consisting of or infused with adult use cannabis, soft drinks, and food that has
been prepared for immediate consumption). 35 ILCS 120/2- 10. The Department’s

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June 4, 2024
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). If vitamins, food supplements or meal
replacement drink mixes are for human use and purport on the label to have medicinal
qualities, such items are considered to be drugs and are taxed at the low rate of 1%.
Since not many vitamins, food supplements or meal replacement drink mixes are likely
to make medicinal claims, they would not qualify as a medicine or drug; however, such
items would be considered to be food subject to 86 Ill. Adm. Code 130.310. ST 180030-GIL.
Thus, if the product at issue meets the definition of medicines or drug in 86 Ill.
Adm. Code 130.311(c), it will be subject to the 1% tax rate. In the alternative, the
product at issue may be considered to be food for human consumption that is to be
consumed off the premises where it is sold which is also subject to the 1% tax rate.
I hope this information is helpful. If you require additional information, please
visit our website at https://tax.illinois.gov or contact the Department’s Taxpayer
Information Division at (217) 782-3336.
Very truly yours,

Katarzyna A. Kowalska
Associate Counsel
KAK:slc