Is a dietary supplement powder sold in stick packs or sachets, mixed with water, taxed as food at Illinois's reduced rate?

Plain-English summary

A company sent the Department product labels for several dietary supplement products -- powders packaged in stick packs, sachets, or capsules -- and asked for a taxability determination. The Department worked through Illinois's layered food/drug/candy/soft-drink classification system to answer.

Illinois taxes ordinary tangible personal property at 6.25%, but food for human consumption meant to be eaten off the premises where it's sold gets a reduced 1% rate (the same reduced rate applies to prescription and non-prescription medicines and drugs). To qualify as a "medicine or drug" at the 1% rate, a product's label has to make an actual medicinal claim -- a written claim to cure, treat, or mitigate a disease, illness, injury, or pain. None of the labels reviewed made that kind of claim, so the products didn't qualify as medicine or drugs -- but that didn't mean they were taxed at the full rate either, because they still qualified as "food" (broadly defined to include any solid, liquid, powder, or item intended primarily for human internal consumption, including things like vitamins).

Two narrower categories could have pulled these products OUT of the reduced food rate, and the Department checked both: "soft drinks" (sweetened non-alcoholic beverages, unless they contain milk, soy, rice/similar substitutes, or more than 50% juice) and "candy" (sugar/sweetener combined with chocolate, fruit, nuts, etc., in bar/drop/piece form, unless it contains flour or requires refrigeration). Because these products are powders meant to be mixed with water or another liquid before consumption, the Department noted that beverage powders and dry mixes are specifically NOT considered soft drinks, and drink-mix-type powders (like hot chocolate mix) are specifically NOT considered candy. None of the products appeared to be prepared for immediate consumption either. Based on the labels, the Department concluded these supplement powders likely qualify for the reduced 1% food rate.

One important caveat the Department flagged: the tax rate can depend on where and how the product is SOLD, not just what it is. If a retailer provides premises for on-site food consumption, Illinois creates a rebuttable presumption that ALL of that retailer's food sales -- even bulk items like these supplement powders -- are "prepared for immediate consumption" and taxed at the higher rate. A retailer can rebut that presumption only by physically separating the on-premises-consumption area from where non-immediate-consumption food is sold, AND keeping separate records/registers tracking high-rate versus low-rate sales.

What this means for you

Dietary supplement and nutrition product sellers

Get your product labels reviewed against Illinois's specific definitions before assuming a tax rate. A powder or drink mix without medicinal claims generally qualifies as food at the reduced 1% rate, as long as it doesn't fall within the narrower "soft drink" or "candy" carve-outs -- and being a powder mixed with liquid, rather than a ready-to-drink beverage, is exactly the kind of detail that keeps it out of those higher-taxed categories.

Retailers who also offer an eat-in area

If you sell food items (including supplements) both for off-premises use AND provide seating/consumption space, don't assume your bulk/off-premises sales automatically get the lower rate -- without a physically separated area and separate recordkeeping for high-rate versus low-rate sales, Illinois presumes ALL your food sales are taxed at the higher rate.

Accountants and tax professionals

When classifying a borderline food/supplement/beverage product, work through the definitions in this order: does the label make a medicinal claim (medicine/drug, 1%)? If not, does it meet the "soft drink" or "candy" definition (6.25%)? If neither, it's food at 1% -- subject to the separate premises-based presumption issue.

Common questions

Q: Are dietary supplement powders automatically taxed at the higher 6.25% rate?
A: Not necessarily. If the label doesn't make a medicinal claim and the product isn't a "soft drink" or "candy" under Illinois's specific definitions, it generally qualifies as food at the reduced 1% rate.

Q: Why don't these supplement powders count as "soft drinks"?
A: Because they're powders or dry mixes meant to be combined with water or another liquid before drinking -- beverage powders and dry mixes are specifically excluded from the "soft drink" definition.

Q: Why don't these supplement powders count as "candy"?
A: Drink-mix-type powders (similar to hot chocolate cocoa mix) are specifically excluded from the "candy" definition, regardless of sweetener content.

Q: Does selling food alongside an eat-in area change the tax rate?
A: It can. Providing premises for on-site consumption creates a rebuttable presumption that ALL of a retailer's food sales are taxed at the higher rate, unless the retailer physically separates the dining area and keeps separate sales records for high-rate versus low-rate items.

Citations and references

Statutes:

• 35 ILCS 120/2-10 (State tax rate for food, drugs, and medicines)

Regulations:

• 86 Ill. Adm. Code 130.310 (definition of "food"; low-rate/high-rate premises presumption; soft drink and candy carve-outs)
• 86 Ill. Adm. Code 130.311 (definition of "medicine or drug")

Source

• Landing page: Illinois 2025 Sales Tax Letter Rulings
• Original PDF: ST25-0049-GIL.pdf

Original ruling text

ST 25-0049-GIL

9/12/2025

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, 311. (This is a GIL.)
September 12, 2025
NAME
TITLE
COMPANY
ADDRESS
Dear NAME:
This letter is in response to your letter received August 4, 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 labels for the items listed below and
provide us with a determination of sales taxability in your state.
Products:

PRODUCT1
PRODUCT2
PRODUCT3
PRODUCT4

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

COMPANY
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September 12, 2025
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), the tax is imposed at the rate of
1%. 35 ILCS 120/2-10; 86 Il. Adm. Code 130.310(a). Prescription and nonprescription
medicines, and drugs are also taxed at the rate of 1%. 35 ILCS 120/2-10; 86 Il. Adm. Code
130.311(a).
It should be noted 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) is exempt from occupation, use, service occupation and
service use taxes imposed by the State. Public Act 103-0781 as codified in 35 ILCS 120/2-5(49),
2-10; 35 ILCS 105/3-5(44), 3-10; 35 ILCS 110/3-5(36), 3-10; 35 ILCS 115/3-5(37), 3-10. However,
under Public Act 103-0781, beginning on January 1, 2026, municipalities and counties may
impose their own local grocery tax by ordinance. If imposed, the tax shall be at the rate of 1%.
“Groceries” has the same meaning as “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)”. 65 ILCS 5/8-11-24; 55 ILCS 5/5-1006.9.
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).
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

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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.
The products at issue in your inquiry appear to be a dietary supplement powder
contained in stick packs, sachets or capsules. The labels for these products do not claim
any medicinal qualities. Thus, these products would qualify as food, and not as medicine or
drugs. Further, according to the label, the powder in the sachets is to be mixed with water.
Although, it is not entirely clear from the letter or the label, it appears that the powder in the
stick packs may also 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, the powder contained in stick packs or sachets would not
be a soft drink or candy. None of the products appear to be for immediate consumption.
Based on this information, it appears that these products may qualify for the lower 1% rate
of tax on food.
However, it should be noted that the tax rate may be impacted by the nature of the
selling establishment. 86 Ill. Adm. Code 130.310(b). If a retailer selling food provides
premises for consumption of food, a rebuttable presumption is created that all sales of food
by that retailer are considered to be prepared for immediate consumption and subject to tax
at the high rate. As a result of this presumption, even bulk food could potentially be taxable
at the high rate. However, this presumption is rebutted if a retailer demonstrates that:
A)

the area for on-premises consumption is physically separated or otherwise
distinguishable from the area where food not for immediate consumption is
sold; and

B)

the retailer has a separate means of recording and accounting for collection
of receipts from sales of both high and low-rate foods. For purposes of
Section 130.310(b)(1)(B), the phrase “separate means of recording and
accounting for collection of receipts” includes cash registers that separately
identify high rate and low-rate sales, separate cash registers, and any other
methods by which the tax on high and low rate sales are recorded at the time
of collection. 86 Il. Adm. Code 130.310(b)(1).

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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,

KAK:sce

Katarzyna Kowalska
Associate Counsel