Are food, medicines, drugs, and medical appliances exempt from Illinois sales tax, or are they taxed at a special rate?

Plain-English summary

A MedSpa business asked the Department to sort out the sales-tax treatment of a long list of offerings -- hormone therapies, Botox and fillers, Hydrafacials and skin peels, IV therapy, nutraceuticals/supplements, weight-control programs, and lab testing -- and specifically asked whether its nutraceutical and supplement products could qualify for the reduced 1% "food for human consumption" rate under 35 ILCS 120/2-10 and 86 Ill. Adm. Code 130.310.

The Department responded with a General Information Letter that walks through Illinois's general sales/use/service tax framework and then focuses on the reduced-rate rules for food, medicines, drugs, and medical appliances. The core holding: none of these items are exempt from tax. Food, prescription and non-prescription medicines, drugs, and medical appliances for human use are taxed at a reduced 1% state rate (plus local taxes), while everything that doesn't qualify is taxed at the general 6.25% state rate (plus local taxes). The same rate split carries over into the Service Occupation Tax Act for servicemen who transfer these items incident to a service.

Within that framework, the letter explains that nutritional supplements and vitamins generally fall within the definition of "food" and so can qualify for the 1% rate, and some may separately qualify as a "medicine or drug" if their label makes a qualifying medicinal claim -- but grooming and hygiene products never qualify for the 1% rate, even if they carry a medicinal claim. The letter also flags a temporary rule: through December 31, 2025, qualifying food is taxed at 1% rather than being exempt, but starting January 1, 2026, food consumed off the premises where sold (with the usual carve-outs for alcohol, cannabis-infused food, soft drinks, candy, and immediate-consumption food) becomes exempt from state Occupation and Use tax under P.A. 103-781.

What this means for you

MedSpa, wellness, and clinic operators

Don't assume "medical" branding makes a product or service tax-favored. The letter separately walks through Retailers' Occupation Tax, Use Tax, and Service Occupation Tax rules, and reminds servicemen that if tangible personal property (TPP) is transferred incident to a service, the tax treatment depends on how that TPP is billed -- separately stated, folded into 50% of the bill, or handled under a de minimis serviceman method. Whether a treatment is a "pure service" versus a taxable transfer of TPP is a separate, fact-specific question from whether any transferred product happens to qualify for the reduced food/medicine rate.

Sellers of supplements, vitamins, and nutraceuticals

Nutritional supplements and vitamins generally count as "food" under 86 Ill. Adm. Code 130.310(b)(1), so they can qualify for the 1% rate. Some may also qualify independently as a "medicine or drug" if the label makes a genuine medicinal claim (a written claim that the product cures, treats, or mitigates disease, illness, injury, or pain) under 86 Ill. Adm. Code 130.311(c) -- but if a product is a grooming or hygiene product, it is taxed at the full 6.25% rate regardless of any medicinal claim, per 86 Ill. Adm. Code 130.311(d). Orally ingested products like vitamins, supplements, and weight-management products are not treated as grooming/hygiene products and remain eligible for the reduced rate if they otherwise qualify.

Sellers of bundled packs, gift baskets, or bundled memberships

If more than 50% of the value of a pack, set, or gift basket is made up of food, medicines, drugs, or medical appliances, the whole bundle is taxed at the reduced 1% rate, per the Department's prior ruling ST-03-0100-GIL. This matters directly for bundled memberships that combine services with supplements or shakes -- proper itemization on invoices affects how the bundle is taxed.

Accountants and tax professionals advising on the food/medicine rate

Track the rate change taking effect January 1, 2026: qualifying food consumed off the premises where sold moves from the reduced 1% rate to a full exemption from state Occupation and Use tax (local taxes may still differ), while food prepared for immediate consumption or consumed on the premises continues to be taxed at the general 6.25% rate. The usual carve-outs (alcoholic liquor, cannabis-infused food, soft drinks, candy, and food prepared for immediate consumption) still don't get the favorable treatment either way.

Common questions

Q: Are food, medicine, and medical appliances tax-exempt in Illinois?
A: No -- as of this letter, they are not exempt. They are taxed at a reduced 1% state rate (plus applicable local taxes), while items that don't qualify are taxed at the general 6.25% state rate.

Q: Do nutritional supplements and vitamins qualify for the reduced rate?
A: Generally yes -- they fall within the regulatory definition of "food," so they can qualify for the 1% rate. Some may also independently qualify as a "medicine or drug" if their label makes a genuine medicinal claim.

Q: Do grooming and hygiene products ever qualify for the reduced 1% rate?
A: No. Grooming and hygiene products are taxed at the general 6.25% rate regardless of whether they make medicinal claims or otherwise meet the definition of an over-the-counter drug.

Q: How is a bundled pack or gift basket of food and non-food items taxed?
A: If more than 50% of the value of the pack, set, or gift basket comes from food, medicines, drugs, or medical appliances, the whole bundle is taxed at the reduced 1% rate, per the Department's prior ruling ST-03-0100-GIL.

Q: Is there an upcoming change to how food is taxed in Illinois?
A: Yes. This letter notes that beginning January 1, 2026, food for human consumption that is consumed off the premises where it is sold (other than alcoholic beverages, cannabis-infused food, soft drinks, candy, and food prepared for immediate consumption) becomes exempt from state Occupation and Use tax under P.A. 103-781, rather than taxed at the reduced 1% rate.

Citations and references

Statutes:

• 35 ILCS 120/2 (imposition of Retailers' Occupation Tax)
• 35 ILCS 120/2-10 (1% reduced rate for food, medicines, drugs, medical appliances; 6.25% general rate)
• 35 ILCS 105/3 (Use Tax on tangible personal property purchased at retail)
• 35 ILCS 115/3-5(37), 35 ILCS 120/2-5(49), 35 ILCS 105/3-5(44), as amended by P.A. 103-781 (food exemption effective January 1, 2026)

Regulations:

• 86 Ill. Adm. Code 130.101 (Retailers' Occupation Tax)
• 86 Ill. Adm. Code 130.310(a)-(b)(1) (reduced rate and definition of "food")
• 86 Ill. Adm. Code 130.311(a) (immediate-consumption food taxed at high rate)
• 86 Ill. Adm. Code 130.311(c)-(e) (medicine/drug definition, grooming/hygiene exclusion, medical appliance definition)
• 86 Ill. Adm. Code 140.101, 140.106, 140.108, 140.109, 140.126 (Service Occupation Tax rules for servicemen)
• 86 Ill. Adm. Code 150.101 (Use Tax)
• 86 Ill. Adm. Code 160.101 (Service Use Tax)

Prior rulings referenced:

• ST-03-0100-GIL (bundled packs/gift baskets taxed at reduced rate if over 50% of value is reduced-rate items)

Source

• Landing page: Illinois 2025 Sales Tax Letter Rulings
• Original PDF: ST25-0046-GIL.pdf

Original ruling text

ST 25-0046-GIL

8/27/2025

FOOD AND MEDICINE

Qualifying foods (through December 31st, 2025), prescription and non-prescription
medicines, drugs and medical appliances, for human use, are not exempt from tax,
and are subject to the reduced tax rate of 1%. (This is a GIL).
August 27, 2025
NAME
COMPANY
ADDRESS
Dear NAME:
This letter is in response to your letter dated August 3, 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:
We are writing on behalf of COMPANY, a wellness-based MedSpa with a
forthcoming location at:
ADDRESS
COMPANY provides medically supervised treatments and wellness services,
many of which involve the administration of tangible personal property (TPP)
by licensed healthcare professionals.
We respectfully request a Private Letter Ruling (PLR) from the Illinois
Department of Revenue regarding the sales and use tax treatment applicable
to the following categories of services and products, as governed by:
•

The Retailer’s Occupation Tax Act (35 ILCS 120/1 et seq.);

COMPANY
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August 27, 2025
•

The Service Occupation Tax Act (35 ILCS 115/1 et seq.); and

•

Title 86 of the Illinois Administrative Code, Part 130.

1. Hormone-Based Therapies & Related Services
   Question: Are the following hormone-related services and supplements
   considered non-taxable medical services when administered or prescribed by
   licensed medical professionals?
   Our Understanding:
   These treatments involve prescription drugs
   administered by licensed Nurse Practitioners in a clinical setting. Based on 86
   Ill. Adm. Code 130.311, we believe these are non-taxable services, with any
   TPP considered incidental and subject to SOT at the provider level.
   •

Hormone Optimization Plans (Rx)

•

Testosterone Therapy

•

Female Hormone Replacement Therapy (HRT)

•

Bioidentical Hormone Replacement Therapy

•

Hormone Nutraceuticals

•

Hormone Consultations

2. Aesthetic Medical Services
   Question: Are aesthetic services performed by licensed professionals
   subject to ROT? Does the use of topical serums, creams, or equipment in
   these procedures create a taxable event?
   Our Understanding: Injectables like Botox and Fillers, and administered by
   prescription, are likely non-taxable. Cosmetic services such as Hydrafacials
   and Skin Peels that involve TPP are likely taxable under 86 Ill. Adm. Code
   130.1920.
   •

Botox Injections (Rx)

•

Dermal Fillers (e.g., Juvederm, Sculptra) (Rx)

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•

Hydrafacial

•

Skin Peels

•

Hair Restoration

•

Microneedling

•

Body Contouring / CoolSculpting

•

EMSculpt NEO

•

CoolTone

3. Wellness-Based Therapy Services
   Question: Are IV therapy, red light, and hyperbaric treatments considered
   non-taxable when no TPP is transferred beyond the service?
   Our Understanding: These services are administered by licensed personnel
   and do not involve a separate sale of TPP. They are interpreted as non-taxable
   services per 86 Ill. Adm. Code 130.310
   •

IV Therapy

•

Red Light Therapy Bed

•

Hyperbaric Oxygen Therapy

•

NAT+ Therapy

4. Nutraceuticals, Vitamins, and Supplements
   Question: Do these products qualify for the reduced 1% tax rate as “food for
   human consumption” under 35 ILCS 120/2-10 and 86 Ill. Adm. Code 130.310?
   Our Understanding: These supplements are consumed off-site and are not
   tied to a prescription. As such, we believe the 1% rate applies.
   •

PRODUCT

•

Weight Control Nutraceuticals

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•

Aesthetic Nutraceuticals

•

Immunity Nutraceuticals

5. Weight Control & Exercise Services
   Question: Are weight management services exempt from sales tax? If
   bundled with supplements or shakes, how should taxation be handled?
   Our Understanding: These are service-based offerings. However, when
   supplements are included and not itemized separately, the full charge may be
   taxable. Proper invoicing is essential.
   •

Weight Loss Plans

•

Muscle Development Programs

•

Exercise & Nutrition Guidance

•

Weight Loss Medication (Rx)

6. Lab Testing and Consultations
   Question: Are lab panels and consultations considered pure services, and
   thus exempt from ROT or SOT?
   Our Understanding: These services do not involve the transfer of TPP and are
   considered non-taxable under 86 Ill. Adm. Code 130.310.
   •

Monthly Lab Panels

•

Initial Medical Consultations

•

Hormone & Wellness Assessments

Additional Context:

• All injectables are administered by licensed Nurse Practitioners.
• Some services are offered as bundled memberships.
• All invoices will itemize services and products.
  We respectfully request:

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-

Confirmation of taxability for each listed category
Clarification on applicable rates (1%, 6.25%, local rates, or exempt)
Guidance on when to apply SOT to consumed materials
Invoicing and recordkeeping best practices

DEPARTMENT’S RESPONSE:
Retailers’ Occupation Tax
The Illinois Retailers’ Occupation Tax Act imposes a tax upon persons engaged in this
State in the business of selling tangible personal property to purchasers for use or
consumption. See 35 ILCS 120/2; 86 Ill. Adm. Code 130.101. In Illinois, 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 35 ILCS 105/3; 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.
If the purchases occur outside Illinois, purchasers must self-assess their Use Tax liability
and remit it directly to the Department.
Service Occupation Tax
Retailers’ Occupation Tax and Use Tax do not apply to sales of service. Under the
Service Occupation Tax Act, businesses providing services (i.e., servicemen) are taxed on
tangible personal property transferred as an incident to sales of service. See 86 Ill. Adm.
Code 140.101. The purchase of tangible personal property that is transferred to the service
customer may result in either Service Occupation Tax liability or Use Tax liability for the
serviceman depending upon his activities. The serviceman’s liability may be calculated in
one of four ways:
(1)

separately-stated selling price of tangible personal property transferred
incident to service;

(2)

50% of the serviceman’s entire bill;

(3)

Service Occupation Tax on the serviceman’s cost price if the serviceman is a
registered de minimis serviceman; or

(4)

Use Tax on the serviceman’s cost price if the serviceman is de minimis and is
not otherwise required to be registered under Section 2a of the Retailers’
Occupation Tax Act.

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Using the first method, servicemen may separately state the selling price of each
item transferred incident to service. The tax is then calculated on the separately stated
selling price of the tangible personal property transferred. If the servicemen do not
separately state the selling price of the tangible personal property transferred, they must
use 50% of the entire bill to the service customer as the tax base. Both of the above methods
provide that in no event may the tax base be less than the serviceman’s cost price of the
tangible personal property transferred. See 86 Ill. Adm. Code 140.106. These methods result
in the customer incurring a Service Use Tax liability. See 86 Ill. Adm. Code 160.101. Under
these methods, servicemen may provide their suppliers with Certificates of Resale when
purchasing the tangible personal property to be transferred as a part of sales of service.
The third way servicemen may account for their tax liability only applies to de minimis
servicemen who have either chosen to be registered or are required to be registered because
they incur Retailers’ Occupation Tax liability with respect to a portion of their business. See
86 Ill. Adm. Code 140.109. Servicemen may qualify as de minimis if they determine that the
annual aggregate cost price of tangible personal property transferred incident to the sale of
service is less than 35% of the total annual gross receipts from service transactions (75% or
greater in the case of servicemen transferring prescription drugs and persons engaged in
graphics arts production). Servicemen do not have the option of determining whether they
are de minimis using a transaction-by-transaction basis. Registered de minimis servicemen
are authorized to pay Service Occupation Tax (which includes local taxes) based upon their
cost price of tangible personal property transferred incident to the sale of service. Such
servicemen should give their suppliers resale certificates and remit Service Occupation Tax
using the Service Occupation Tax rates for their locations. This method also results in the
customer incurring a Service Use Tax liability.
The final method of determining tax liability may be used by de minimis servicemen
that are not otherwise required to be registered under Section 2a of the Retailers’
Occupation Tax Act. Such de minimis servicemen handle their tax liability by paying Use Tax
to their suppliers. If their suppliers are not registered to collect and remit tax, the servicemen
must register, self-assess and remit Use Tax to the Department. The servicemen are
considered to be the end-users of the tangible personal property transferred incident to
service. Consequently, they are not authorized to collect a “tax” from the service
customers. See 86 Ill. Adm. Code 140.108. Under this method the customer incurs no
Service Use Tax liability. However, they generally either seek reimbursement of the tax from
their customers or build the tax into their prices.
The provision of a service in Illinois that is not accompanied by the transfer of tangible
personal property is generally not subject to Retailers’ Occupation Tax or Service
Occupation Tax liability.
Food, Drugs, and Medical Appliances

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August 27, 2025
Food, prescription and non-prescription medicines, drugs and medical appliances,
for human use, are not exempt from tax. A tax is imposed on these items at the rate of 1%.
35 ILCS 120/2-10; 86 Ill. Adm. Code 130.310(a). Local sales taxes may also apply, depending
upon where sales are made. Those items that do not qualify for the low rate are taxed at the
State rate of 6.25%, plus applicable local taxes. The same rate distinctions apply under the
Service Occupation Tax Act. See 86 Ill. Adm. Code 140.126.
Food is defined as “any solid, liquid, powder or item intended by the seller primarily
for human consumption, whether simple, compound or mixed, including foods such as
condiments, spices, seasonings, vitamins, bottled water and ice”. 86 Ill. Adm. Code Section
130.310(b)(1).
Taxation of food at the reduced sales tax rate depends on whether the food is
prepared by the serviceman for immediate consumption or is for consumption off the
premises where sold, therefore, the nature of the premises where the food is sold is a factor
in determining the applicable sales tax rate. Food for human consumption which is sold or
transferred by a taxpayer, either as a standalone transaction or as an incident to a sale of
service, is generally subject to the high rate of tax of 6.25% if it is prepared for immediate
consumption or is sold for consumption on the premises of the sale. A tax rate of 1% will
apply on food for human consumption that is to be consumed off the premises where it is
sold (other than alcoholic liquor, food consisting of or infused with adult use cannabis, soft
drinks, candy, and food that has been prepared for immediate consumption and is not
otherwise included in 86 Ill. Adm. Code 140.126(a), 130.310(a), and 130.311(a)). It is
important to note that beginning on January 1, 2026, 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, candy, and food that has been
prepared for immediate consumption) will be exempt from state Occupation and Use taxes.
See 35 ILCS 115/3-5(37), 35 ILCS 120/2-5(49), and 35 ILCS 105/3-5(44), as amended by P.A.
103-781.
Where an establishment does not provide facilities for on-site consumption, the
business would still charge a high rate of tax on all food sales if a majority of the gross
receipts from food resulted from food prepared by the retailer for immediate consumption.
However, where an establishment primarily sells food (over 50%) in bulk, such
establishment will incur the reduced rate on all food items (other than alcoholic liquor, food
consisting of or infused with adult use cannabis, soft drinks, candy, and food that has been
prepared for immediate consumption and is not otherwise included in 86 Ill. Adm. Code
140.126(a), 130.310(a), and 130.311(a), which will always incur the higher rate).
Nutritional supplements and vitamins are generally included within the definition of
food, as that term is defined under the regulations. Therefore, such products would qualify

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August 27, 2025
for the reduced rate, provided they meet the criteria detailed in 86 Ill. Adm. Code 130.310.
The taxation of nutritional supplements sold in packs with food or non-food items would
depend upon whether the set was primarily made up of reduced tax rate items. If more than
50% of the value of a pack, set or gift basket of items sold together is derived from food,
prescription and non-prescription medicines, drugs and/or medical appliances, then the
pack, set or gift basket is taxed at the reduced rate. See ST-03-0100-GIL.
Further, some of the nutritional supplements sold may also qualify for the lower tax
rate because of the classification of those products as a drug. Under the rule, a medicine or
drug is defined as “any pill, potion, salve, or other preparation intended by the manufacturer
for human use and which purports on the label to have medicinal qualities”. 86 Ill. Adm.
Code 130.310(c)(1). 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. Please refer to 86 Ill. Adm. Code 130.310(c) for
examples of medicinal claims that will qualify products for the low rate.
Medicines
and
drugs
do
not
include
grooming
and
hygiene
products. Nonprescription medicines and drugs that are grooming and hygiene products do
not qualify for the 1% rate of tax for medicines and drugs under 86 Ill. Adm. Code
130.311(c). Grooming and hygiene products do not qualify for the 1% rate, regardless of
whether the products make medicinal claims or meet the definition of over-the-counter
drugs. Grooming and hygiene products are taxed at the general merchandise rate of 6.25%.
For more information on grooming and hygiene products, see 86 Ill. Adm. Code 130.311(d).
Additionally, products that are taken orally and ingested, like vitamins, supplements and
weight gain or weight loss products, are not grooming and hygiene products and can qualify
for the 1% rate of tax if they meet the requirements of 86 Ill. Adm. Code 130.311(c) stated
above.
Medical appliances are items that are used to directly substitute for a malfunctioning
part of the human body. These items may be prescribed by licensed health care
professionals for use by a patient, purchased by health care professionals for the use of
patients, or purchased directly by individuals. See 86 Ill. Adm. Code 130.311(e). Moreover,
diagnostic equipment shall not be deemed to be a medical appliance, except as provided in
86 Ill. Adm. Code 130.311(g). Other medical tools, devices, and equipment such as x-ray
machines, laboratory equipment, and surgical instruments that may be used in the
treatment of patients but that do not directly substitute for a malfunctioning part of the
human body do not qualify as medical appliances for purposes of the reduced tax rate. 86
Ill. Adm. Code 130.311(e)(5).
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.

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Very truly yours,

George L. Encarnacion, Jr.
Associate Counsel
GLE:sce