Ezel / Tax Rulings / NY
NY TSB-A-20(19)S Sales Tax 2020-06-19

Are sales of kombucha, a fermented tea beverage, subject to New York sales tax?

Short answer: No. Although carbonated soft drinks are taxable, tea is specifically exempt from sales tax under Tax Law 1115(a)(1). Kombucha is a flavored, naturally fermented tea, so it qualifies as exempt tea and the grocer's sales of it are not subject to sales tax.
Currency note: this ruling is from 2020
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official New York State Department of Taxation and Finance Advisory Opinion (TSB-A), issued by the Office of Counsel at a taxpayer's request. It is limited to the facts set forth in it and binds the Department only with respect to the petitioner to whom it was issued, and only if that petitioner fully and accurately described all relevant facts; another taxpayer cannot rely on it. It reflects the law, regulations, and Department policy in effect when issued and may since have changed. Taxpayer-identifying details are redacted. New York State and local sales taxes are administered centrally by the Department. This summary is informational only and is not legal or tax advice. Consult a licensed New York tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

A national grocery chain asked whether its kombucha is taxable. Kombucha is a tea naturally fermented with sugar and/or honey; the fermentation makes it lightly carbonated and gives it a trace of alcohol (less than 0.5%). It comes in different varieties and may contain fruit juices and herbs.

The Office of Counsel concluded the kombucha is not subject to sales tax. Food and beverages are generally exempt, and while carbonated soft drinks are an exception, tea is specifically exempt under Tax Law § 1115(a)(1). Because kombucha is a flavored tea, it qualifies as exempt tea, and the carbonation from fermentation does not turn it into a taxable soda.

What this means for you

Grocers and beverage sellers

Tea, including fermented teas like kombucha, is exempt from New York sales tax even when it is carbonated. Don't treat the bubbles alone as making it a taxable soft drink.

Beverage makers

A product's classification turns on what it actually is. A tea stays exempt as tea; contrast a no-juice mixer or soda-fountain drink, which is a taxable soft drink (see TSB-A-20(15)S on orgeat syrup).

Accountants and tax professionals

Section 1115(a)(1) lists tea among specifically exempt beverages. The trace alcohol here (under 0.5%) keeps it outside the alcoholic-beverage exclusion as well.

Common questions

Q: Isn't kombucha carbonated like soda?
A: It is lightly carbonated from fermentation, but it is still tea, which is specifically exempt. The exemption controls.

Q: Does the trace alcohol make it a taxable alcoholic beverage?
A: No. At less than 0.5% alcohol it is not treated as an alcoholic beverage here.

Q: What if a tea drink is loaded with added juice or sweeteners?
A: Classification is fact-specific; a product marketed and sold as tea is exempt, but heavily modified beverages could be analyzed differently.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

Statutes and guidance:
- Tax Law § 1105(a); § 1115(a)(1) (tea specifically exempt)

Source

Original ruling text

New York State Department of Taxation and Finance
Office of Counsel

TSB-A-20(19)S
Sales Tax
June 19, 2020

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION
The Department of Taxation and Finance received a Petition for Advisory Opinion from
[ REDACTED ] (“Petitioner”). Petitioner asks whether the sale of its Kombucha tea beverage is subject to
sales tax.
We conclude that receipts from the sales of Petitioner’s Kombucha tea beverage are not subject to
sales tax.
Facts
Petitioner is a national chain of grocery stores. Petitioner’s Kombucha beverage is a tea that is
naturally fermented with sugar and/or honey. Because of the fermentation process, the beverage is
carbonated and has trace amounts of alcohol (less than 0.5%). The beverage comes in different varieties
and may contain fruit juices and herbs.
Analysis
Food and beverages generally are exempt from sales the tax imposed under Tax Law § 1105(a), on
the sale of tangible personal property. Tea is specifically exempt from sales tax pursuant to Tax Law §
1115(a)(1). Petitioner’s Kombucha beverage is a flavored tea. Accordingly, the receipts from Petitioner’s
sales of its Kombucha tea beverage, as described in this Advisory Opinion, are exempt from sales tax as
tea qualifies as an exempt beverage.
DATED: June 16, 2020
/S/
DEBORAH R. LIEBMAN
Deputy Counsel
NOTE:

An Advisory Opinion is issued at the request of a person or entity. It is limited to the facts
set forth therein and is binding on the Department only with respect to the person or entity
to whom it is issued and only if the person or entity fully and accurately describes all
relevant facts. An Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific time period at issue
in the Opinion. The information provided in this document does not cover every situation
and is not intended to replace the law or change its meaning.