What Illinois state sales tax rate applies to sales of food, and how are soft drinks and candy treated?

Plain-English summary

As of this March 2025 letter, Illinois taxed most food meant to be eaten off the premises at a reduced state rate of 1%, instead of the standard 6.25% Retailers' Occupation Tax rate. The Department wrote in response to a seller asking how a "whole foods" product would be taxed.

The 6.25% rate applies to gross receipts from sales of tangible personal property unless a lower rate is specified (35 ILCS 120/2-10). "Food for human consumption that is to be consumed off the premises where it is sold" gets the 1% rate — except alcoholic beverages, food containing adult-use cannabis, soft drinks, and food prepared for immediate consumption, which stay at 6.25%.

How the key terms are defined

• Food: any solid, liquid, powder, or item the seller intends primarily for human internal consumption — including condiments, spices, seasonings, vitamins, bottled water, and ice (86 Ill. Adm. Code 130.310(c)(1)).
• Soft drinks (taxed at 6.25%): non-alcoholic beverages containing natural or artificial sweeteners. A beverage is not a soft drink — and therefore is food — if it contains 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)).
• Candy (taxed at 6.25%): a preparation of sugar, honey, or other sweeteners combined with chocolate, fruits, nuts, or other ingredients in bars, drops, or pieces. Anything that contains flour or requires refrigeration is not candy, even if it otherwise fits (35 ILCS 120/2-10; 86 Ill. Adm. Code 130.310(d)(7)(A)).
• Vending machines: off-premises food includes all vending-machine food except soft drinks, candy, and food dispensed hot.

The letter also notes the rate can be affected by the nature of the selling establishment (86 Ill. Adm. Code 130.310(b)).

How it applied to the product

The product was a powder in stick packs that appeared to be mixed with liquid. The Department explained that powdered drink mixes are not soft drinks (86 Ill. Adm. Code 130.310(d)(6)(E)(i)) and powdered drink mixes are not candy (86 Ill. Adm. Code 130.310(d)(7)(G)(vi)). Because the product was also not prepared for immediate consumption, it appeared to qualify for the lower 1% food rate.

Common questions

Q: What rate applied to groceries under this 2025 letter?

A: A reduced 1% state rate for food to be consumed off the premises, versus the standard 6.25% for general merchandise.

Q: Are all drinks taxed the same?

A: No. Sweetened non-alcoholic beverages are "soft drinks" taxed at 6.25%, but a drink with milk, a milk substitute, or more than 50% juice is treated as food.

Q: Is a sweet snack always "candy"?

A: No. If it contains flour or requires refrigeration, it is not candy — so it can still get the food rate.

Q: How were the powdered stick-pack mixes treated?

A: As food eligible for the 1% rate — they were neither soft drinks, candy, nor food prepared for immediate consumption.

Citations and references

• 35 ILCS 120/2-10 — Retailers' Occupation Tax rate; reduced rate for off-premises food; soft drink and candy definitions
• 86 Ill. Adm. Code 130.310 — food, soft drinks, and candy: (b) selling establishment, (c)(1) food, (d)(6) soft drinks, (d)(7) candy

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2025.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2025/st25-0014-gil.pdf

Original ruling text

ST 25-0014-GIL

03/17/2025

FOOD

This letter discusses the State tax rate applicable to the sales of food. 35 ILCS
120/2- 10; 86 Ill. Adm. Code 130.310. (This is a GIL.)
March 17, 2025
NAME
COMPANY
ADDRESS
EMAIL
Dear NAME:
This letter is in response to your letter dated January 30, 2025, 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
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:
Please review the attached product label for the items listed below and
provide us with a determination of sales taxability in your state. Please note
that these products are categorized as whole foods.
Product:

PRODUCT

I will be happy to provide additional information if needed. Thank you for your
prompt attention to this matter.
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. With respect to food
for human consumption that is to be consumed off the premises where it is sold (other

COMPANY
Page 2
March 17, 2025
than alcoholic beverages, food consisting of or infused with adult use cannabis, soft
drinks, and food that has been prepared for immediate consumption), the tax is imposed
at the rate of 1%. 35 ILCS 120/2- 10.
The Department’s 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” does 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.
“Food for human consumption that is to be consumed off the premises where it is
sold” includes all food sold through a vending machine, except soft drinks, candy, and
food products that are dispensed hot from a vending machine, regardless of the location
of the vending machine. “Food for human consumption that is to be consumed off the
premises where it is sold” does not include candy. 35 ILCS 120/2-10.
“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.
35 ILCS 120/2-10; 86 Ill. Adm. Code
130.310(d)(7)(A). 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.
It should be noted that the tax rate may also be impacted by the nature of the
selling establishment. See 86 Il. Adm. Code 130.310(b). The product at issue in your
inquiry appears to be a powder contained in stick packs. Although it is not entirely clear
from the letter or the label, it appears that this product may be mixed with liquid. Beverage
powders and dry mixes are not considered soft drinks.
86 Ill. Adm. Code
130.310(d)(6)(E)(i). Powdered hot chocolate cocoa mix and other drink mixes are not
considered candy. 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.

COMPANY
Page 3
March 17, 2025
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 800-732-8866.
Very truly yours,

Katarzyna Kowalska
Associate Counsel
KAK:sce