Ezel / Tax Rulings / TX
TX 8808L0889E01 Sales and/or Use Tax (State,Local,MTA) 1988-08-11

Are powdered drink mixes like Kool-Aid taxable in Texas after the food exemption was repealed?

Short answer: Powdered drink mixes such as Kool-Aid are taxable in Texas. The exemption that once covered these mixes was repealed effective October 1, 1987, so their sale has been subject to sales tax since that date — even though older informational brochures the Comptroller mailed in 1984 and 1988 still described them as exempt.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
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 Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas 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 on this page) is the authoritative source for any reliance.

Plain-English summary

Someone asked the Texas Comptroller whether powdered drink mixes are taxable. The answer: yes. Texas once exempted powdered drink mixes (the letter names Kool-Aid as an example), but that exemption was repealed effective October 1, 1987. Since that date, sales of these mixes are taxable.

The letter also flags a practical wrinkle: informational brochures the office mailed out in 1984 and 1988 described the taxability of these items differently — a reminder that the 1987 repeal changed the answer, so older printed guidance should not be relied on.

The letter is titled for "punch concentrate — liquid/powdered form," but its actual discussion and holding are about powdered drink mixes; it does not separately analyze a liquid concentrate.

What this means for you

Grocery and convenience retailers

If you sell powdered drink mixes (Kool-Aid and similar), collect sales tax on them. The exemption that may once have covered them ended on October 1, 1987.

Don't rely on old printed guidance

The Comptroller itself points out that brochures from 1984 versus 1988 gave different answers. When a rule changes, prior handouts can be stale — check current law rather than an old flyer.

Common questions

Q: Are powdered drink mixes like Kool-Aid taxable in Texas?
A: Yes. Sales of these mixes have been taxable since the exemption for them was repealed effective October 1, 1987.

Q: Why did I see conflicting information?
A: The Comptroller's own brochures from 1984 and 1988 described these items differently because the law changed in between. The 1987 repeal controls.

Q: Can I rely on this 1988 letter today?
A: Treat it as guidance only. It is based on the facts presented and can change with different facts; on the STAR system it binds the Comptroller only as to the taxpayer it was issued to and may no longer reflect current policy.

Citations and references

Rules and statutes: The letter states that the exemption for powdered drink mixes was repealed effective October 1, 1987, but does not cite a specific Tax Code section or Comptroller rule by number.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

August 11, 1988

Dear ****:

Thank you for your inquiry regarding the taxability of powdered drink
mixes.

The exemption for powdered drink mixes such as Kool-Aid was
repealed effective October 1, 1987. Therefore, sales of these
mixes are taxable as of this date. Accordingly, the informational
brochures you received from this office in 1984 and 1988 would
differ regarding the taxability of these items.

This opinion is based on the facts presented. If there are
additional or different facts, the opinion may change.

If you have any questions, please contact Tax Correspondence. You
may call toll free 1-800-531-5441, or our regular number is 512/463-4600.

Sincerely,
Bob Jeffcoat
Tax Correspondence

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