Does a soy-based powdered beverage mix marketed as a milk substitute ('Better than Milk') qualify for Texas's sales tax food exemption?

Plain-English summary

A business asked the Comptroller whether its product "Better than Milk" — a soy-based powdered beverage mix — qualifies as an exempt food item, submitting a copy of the product's label for review. The Comptroller confirmed: "Better than Milk" qualifies for exemption from Texas sales tax as a food product milk substitute.

What this means for you

Retailers and manufacturers of soy-based or other non-dairy milk substitute products

A soy-based powdered beverage mix marketed and labeled as a milk substitute can qualify for Texas's food exemption. Since the Comptroller's determination here was based on reviewing the actual product label, the specific labeling and marketing of your product matters — a similar product with different labeling or ingredient claims might need its own separate confirmation.

Grocery and health-food retailers

If you carry soy milk or similar dairy-alternative beverage products, this letter supports treating them as exempt food items for Texas sales tax purposes, consistent with how conventional milk is treated.

Accountants and tax professionals

This is a narrow, single-product determination based on the specific label submitted — useful as a data point for the general proposition that soy-based milk substitutes can qualify as exempt food, but not a blanket ruling covering every non-dairy or plant-based beverage product on the market.

Common questions

Q: Is a soy-based powdered milk-substitute beverage mix exempt from Texas sales tax?
A: Yes, according to this letter — "Better than Milk," a soy-based powdered beverage mix, qualifies for the food exemption as a milk substitute.

Q: Does this exemption apply to all non-dairy or plant-based milk substitutes?
A: This letter addresses one specific labeled product. Other products would need their own confirmation based on their own labeling and composition.

Q: What did the Comptroller review to make this determination?
A: A copy of the product's label, submitted by the taxpayer with the ruling request.

Citations and references

No specific statute or rule section was cited in the available text of this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200006431L

Original ruling text

June 28, 2000

Fax **

Dear **:

Thank your for your letter asking for a ruling on whether the product "Better
than Milk" for which you submitted a label copy qualifies as a food item exempt
from sales tax.

Response: Better than Milk, a soy-based powdered beverage mix qualifies for
exemption from sales tax as food product milk substitute.

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

I hope this information answers your questions. If you need additional
information, please call me toll-free at 1-800-531-5441, extension 3-4502. The
direct line is 512/463-4502. You may also write to Tax Policy Division,
Comptroller of Public Accounts. You may also e-mail our tax help section at: