Answer: Xylitol is keto-friendly and doesn't count towards daily carb limits.
Xylitol is a sugar alcohol that occurs naturally in fruits and vegetables. It's calorie-free and doesn't affect blood glucose levels. As such, you can disregard its carb count when counting your daily net carbs.
Food labels often list the amount of carbs that come from xylitol or other sugar alcohols. For example, if a food has 8 g of total carbs but 3 g of xylitol, you can subtract out the xylitol, meaning that the food's total net carb count is 5 g.
Xylitol is a popular low-carb substitute for sugar and is the main ingredient in branded sweeteners like Xylosweet and Ideal Sweetener. It's roughly equivalent to sugar in sweetness, so you can substitute it for sugar in recipes at a 1:1 ratio. (Be aware that xylitol absorbs moisture more quickly than sugar does and doesn't interact with yeast.)
One benefit of xylitol is that it can improve tooth health, which explains why so many sugar-free gum brands use it as a sweetener. However, a small percentage of people experience unpleasant side effects like gassiness or irritable bowel syndrome after consuming sugar alcohols. If you find yourself in this camp, consider stevia, which is better for people with sensitive stomachs.
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