Does a grocer have to charge the higher 6.25% sales tax rate on cold salads, or the preferential 1% low food rate?

Plain-English summary

Illinois taxes most food, but not all at the same rate. Under 86 Ill. Adm. Code 130.310, food can be taxed at the State general merchandise "high" rate (6.25%) or at a preferential "low" rate (1%, plus any applicable local taxes), depending on the item and how it's sold. This GIL is not about an exemption — it's about which of those two rates applies to cold salads sold by a grocer.

A city auditor asked the Department about a grocer that charges the 1% low rate on its pizzas (because they aren't ready to eat when purchased) but wasn't sure what rate applied to its cold salads. The store sells two kinds: pre-made salads kept in sealed containers in the refrigerator, and "create your own" salads assembled fresh after the customer orders. The store has no seating and doesn't hand out utensils, plates, or napkins.

The Department explained that the applicable rate turns on two factors: (1) whether the retailer provides premises for on-premises consumption, and (2) the nature of the food item itself. Because this grocer offers no seating, the first factor favors the low rate for most items. But the second factor — the nature of the item — still matters separately. The regulation's own examples state that a salad "prepared to the individual order of a customer" is food prepared for immediate consumption and must be taxed at the high rate, "similar to a sandwich." Pre-made cold salads (like potato salad, pasta salad, or bean salad) sold by weight or by container, by contrast, are listed as food that is not prepared for immediate consumption, so they get the low rate. The result: the store's sealed, pre-made cold salads qualify for the 1% rate, but its "create your own" salads must be taxed at 6.25%, regardless of the lack of seating or utensils.

What this means for you

Grocery and prepared-food retailers

Don't assume that "no seating" alone gets you the 1% low rate on everything. Illinois's food tax rules apply two separate tests — the premises test and the nature-of-the-item test — and a customized item (built to the customer's individual order, hot or cold) is taxed at the 6.25% rate even in a store with no eating facilities. If you sell both pre-made grab-and-go salads and made-to-order salad options, you need separate tax treatment and likely separate SKUs or point-of-sale coding for each.

Accountants and tax professionals

The key regulatory hook is 86 Ill. Adm. Code 130.310(c)(2)(A) (food prepared for immediate consumption, which expressly includes salad bars and individually-ordered salads and sandwiches) versus 130.310(c)(2)(B) (food not prepared for immediate consumption, which expressly lists cold salads, jellos, and stuffed vegetables/fruits sold by weight or quantity). When advising a client, confirm exactly how each menu item is prepared and packaged before assigning a rate — "cold salad" is not a single tax category.

Local government auditors and food & beverage tax administrators

This GIL originated from a municipal auditor checking a business's compliance with a local food & beverage tax. Because many local food and beverage taxes piggyback on the State's food classification, getting the State-law rate distinction right (pre-made vs. custom) is often a prerequisite to correctly assessing the local tax too.

Common questions

Q: Does Illinois exempt food from sales tax entirely?
A: No. This letter is about which rate applies (1% low rate vs. 6.25% high rate), not about a full exemption. Illinois taxes most food; the question is always which rate applies.

Q: If a grocer has no seating and doesn't give out utensils, does that mean everything is taxed at 1%?
A: Not necessarily. Lack of seating and utensils satisfies the "premises" factor, which supports the low rate for most items, but a separate factor — the nature of the item — still applies. A salad made to a customer's individual order is treated as "food prepared for immediate consumption" and is taxed at the high rate regardless of seating.

Q: What's the difference between a pre-made cold salad and a "create your own" salad for tax purposes?
A: A pre-made cold salad stored in a sealed container (like potato salad, pasta salad, or bean salad sold by weight or container) is listed under 86 Ill. Adm. Code 130.310(c)(2)(B) as food not prepared for immediate consumption, taxed at 1%. A salad assembled fresh after the customer places an order is treated like an individually-ordered sandwich or a salad-bar item under 130.310(c)(2)(A), taxed at 6.25%.

Q: Is this letter binding on the Department?
A: No. It's a General Information Letter (GIL), which only points the requester to the relevant regulations. A GIL is not a statement of Department policy and is not binding, unlike a Private Letter Ruling (PLR), which is binding on the Department as to the specific taxpayer and facts presented.

Q: Who asked for this GIL, and about what business?
A: A municipal auditor conducting an audit of a grocer's local food & beverage tax compliance asked the Department to confirm the correct State sales tax rate on the grocer's cold salads. The taxpayer's and city's identifying details are redacted in the published letter.

Citations and references

• 86 Ill. Adm. Code 130.310 (Food, Soft Drinks and Candy — governs which tax rate applies to food)
• 86 Ill. Adm. Code 130.310(b) (two factors: premises for on-premises consumption, and the nature of the food item)
• 86 Ill. Adm. Code 130.310(c)(2)(A)(i)-(iv) ("food prepared for immediate consumption" — includes salad bars and individually-ordered salads/sandwiches, taxed at the high rate)
• 86 Ill. Adm. Code 130.310(c)(2)(B)(i)-(iv) (food not prepared for immediate consumption — includes cold salads, jellos, stuffed vegetables/fruits sold by weight/quantity, taxed at the low rate)
• 86 Ill. Adm. Code 130.310(d) (how a retailer can rebut the presumption created by offering on-premises seating)
• 86 Ill. Adm. Code 130.101 (Retailers' Occupation Tax imposition)
• 86 Ill. Adm. Code 150.101 and 150.130 (Use Tax imposition and credit for Retailers' Occupation Tax paid)
• 2 Ill. Adm. Code 1200.110 and 1200.120 (Private Letter Ruling and General Information Letter procedures)

Source

• Landing page: Illinois 2025 Sales Tax Letter Rulings
• Original PDF: ST 25-0043-GIL

Original ruling text

ST 25-0043-GIL 08/05/2025 FOOD
Food items for immediate consumption are subject to the higher tax rate. See 86 Ill.
Adm. Code 130.310. (This is a GIL).
August 5, 2025
NAME
TITLE
CITY
EMAIL
Dear EMAIL:
This letter is in response to your email dated July 21, 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:
I am the TITLE for the CITY. My primary duty is to perform audits to ensure
businesses are in compliance with our City ordinances.
I am currently auditing COMPANY. COMPANY is categorized as a grocer and
therefore, charges 1% tax on the sale of their pizzas since they are not ready
to consume once purchased. They questioned what rate they should be
charging on their salads.
On July 7, 2025, I contacted one of your agents with a question regarding the
tax COMPANY should be charging their customers on the sale of their cold
salads. The salads listed on their menu are pre-made and stored in a sealed
container in the refrigerator. The “create your own” salads are made fresh
after the order has been place [sic].

CITY/NAME
Page 2
August 5, 2025
I spoke with IDOR agent, NAME1, badge #XXXXX, who consulted with his
superior NAME2. I was told that any salad that is customized should be taxed
at the higher tax rate.
Page 3 of the IDOR Administrative Code Title 86 states, “Food prepared for
immediate consumption” does not include cold salads. Page 4 states, “If a
retailer does not provide seating or facilities for on-premises consumption of
food, then the low rate of tax will be applied to all food items except for “food
prepared for immediate consumption.”
COMPANY’s does not have seating or facilities for on-premises
consumption. They do not provide utensils, plates, or napkins.
Given this information, should any of their cold salads be taxed at the higher
rate? The way the Administrative Code reads, all cold salads are taxed at the
lower tax rate.
This information is vital to the conclusion of my audit findings and also for
future CITY, Food & Beverage tax payments.
Thank you in advance for your assistance.
DEPARTMENT’S RESPONSE:
The Retailers’ Occupation Tax Act imposes a tax upon persons engaged in this State
in the business of selling tangible personal property at retail to purchasers for use or
consumption. See 86 Ill. Adm. Code 130.101. Use Tax is imposed on the privilege of using,
in this State, any kind of tangible personal property that is purchased anywhere at retail from
a retailer. See 86 Ill. Adm. Code 150.101. These taxes comprise what is commonly known
as “sales tax” in Illinois. If the purchases occur in Illinois, the purchasers must pay the Use
Tax to the retailer at the time of purchase. The retailers are then allowed to reduce the
amount of Use Tax they must remit by the amount of Retailers’ Occupation Tax liability which
they are required to and do pay to the Department with respect to the same sales. See 86
Ill. Adm. Code 150.130.
The Department’s regulation governing food is found at Section 130.310 (“Food, Soft
Drinks and Candy”). Food can be taxed at either the State general merchandise, or “high”
rate (6.25%), or a preferential low rate of 1% (plus any applicable local taxes). As Section
130.310 explains, the applicable tax rate depends upon several factors.

CITY/NAME
Page 3
August 5, 2025
The manner in which food is taxed depends upon two distinct factors that must both
be considered in determining if food is prepared for immediate consumption or if food is
prepared for consumption off the premises where sold:

1. The first factor is whether the retailer selling the food provides premises for
   consumption of food.
2. The second factor is the nature of the food item being sold.
   86 Ill. Adm. Code 130.310(b).
   As to the first factor, if retailers provide facilities for the on-premises consumption of
   food, a presumption is created that all sales of food are taxable at the higher rate. However,
   this presumption can be rebutted if the following two criteria are demonstrated:
3. The area for on-premises consumption is physically separated or otherwise
   distinguishable from the area where food not for immediate consumption is sold;
   and
4. The retailer utilizes a means of recording and accounting for collection of receipts
   from the sales of food prepared for immediate consumption (high rate) and the
   sales of food that are not prepared for immediate consumption (low rate).
   86 Ill. Adm. Code 130.310(b) and (d).
   As to the second factor, the nature of the food item being sold, certain items are
   always taxable at the high rate, such as candy, soft drinks and “food prepared for immediate
   consumption.” The latter term is explained in greater detail at subsection (c)(2)(A)(i) through
   (iv) of the regulation. Examples include, but are not limited to, all hot foods, sandwiches
   prepared to the individual order of a customer, and salad bars where a customer can
   prepare his or her own salad (both hot and cold). Food that is not considered “food prepared
   for immediate consumption” is explained in greater detail at subsection (c)(2)(B)(i) through
   (iv) of the regulation. Examples include, but are not limited to, doughnuts, cookies, bagels,
   or other bakery items prepared by a retailer and sold either individually or in another quantity
   selected by the customer, provided they are for consumption off the premises where sold,
   and cold salads, jellos, stuffed vegetables or fruits sold by weight or by quart, pint, or other
   quantity by a retailer. Similar to a sandwich, a salad that is prepared to the individual order
   of a customer will also be subject to the high rate of tax. Generally, cold salads refer to
   prepared salads, including deli items such a potato salad, pasta salad, or bean salad.

CITY/NAME
Page 4
August 5, 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,

KAR:slc

Kimberly Rossini
Associate Counsel