Illinois Discusses Rate Hike on Candy, Grooming Products, and Soft Drinks

Illinois has released and information bulletin explaining the change in tax bases for certain classes of merchandise. Effective September 1, 2009, these items will be taxed at the general state rate of 6.25%.

For Illinois taxing purposes, candy is defined as the 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. Examples of candy include chocolate bars, yogurt or chocolate covered fruit or nuts, honey coated nuts, caramel popcorn, lollipops, snack mixes containing yogurt or chocolate, breath mints, and gum. Items excluded from the definition of candy are those that contain flour or require refrigeration, such as chocolate covered cookies, yogurt covered pretzels, “candy” that contains flour, plain dried fruits, and nuts with no added sweeteners. A retailer can check the ingredients label or package to determine if an item qualifies as candy.

Personal grooming and hygiene products for humans are taxed at the general state rate regardless if they make a medicinal claim, unless sold as a result of a prescription. These products include body soap and cleansers, shampoo, toothpaste, mouthwash, antiperspirant, and suntan lotion and screens.

The definition of “soft drink” has changed to mean any non-alcoholic beverage containing natural or artificial sweeteners. This includes soda, sport or energy drinks, sweetened tea, waters containing natural or artificial sweeteners, beverages containing 50 percent or less fruit or vegetable juice, and all other preparations commonly known as soft drinks. “Soft drink” does not include any beverage containing milk or milk products, soy, rice or similar milk substitutes, unsweetened teas, drinks with greater than 50 percent of vegetable or fruit juice by volume, and carbonated or uncarbonated water that contains no natural or artificial sweeteners. These will still be taxed as food (reduced rate).

The change in the definition of “soft drink” does affect the Chicago Soft Drink Tax in that the “soft drinks” previously identified as moving from the reduced rate to general state rate will now be subject to the Chicago Soft Drink Tax. (Informational Bulletin FY 2010-01, Illinois Department of Revenue, July 2009)

Posted on September 27, 2009