The legal definition of a medicine varies slightly from state-to-state, but it generally includes any pill, powder or substance that is intended to treat, cure or mitigate human disease or ailments and has medicinal qualities. For the purposes of this blog post, the definition does not include medical devices, prostheses, supplies (including bandages), personal hygiene products or medicinal marijuana, all of which will be addressed in subsequent postings. Finally, a prescription medicine is one that is ordered by a licensed member of the medical profession, and an over-the-counter (OTC) medicine is any medicine, as defined above, that may be purchased without a prescription.
With that in mind, there are only two (2) states that currently tax prescription medicine: Illinois and Georgia.
- Illinois– currently subjects prescription medicine to a reduced rate of tax.
- Georgia– exempts prescription medicine from tax but OTC medicine such as aspirin, acetaminophen, ibuprofen, cold remedies, antacids, laxatives, and cold sore gels are subject to tax, even if purchased under a prescription.
In every other state, prescription medicines are exempt from tax.
OTC medicine is generally tax-exempt in the following eight (8) states/jurisdictions: District of Columbia (as of 4/1/2015), Maryland, Minnesota, New Jersey, New York, Pennsylvania, Vermont and Virginia.
The following states have enacted qualified exemptions for OTC medicines:
- Connecticut– as of 4/1/2015, certain OTC medicines are exempt from tax including: vitamin or mineral concentrates; dietary supplements; natural or herbal drugs or medicines; products intended to be taken for coughs, colds, asthma or allergies, or antihistamines; laxatives; antidiarrheal medicines; analgesics; antibiotic, antibacterial, antiviral and antifungal medicines; antiseptics; astringents; anesthetics; steroidal medicines; anthelmintics; emetics and antiemetics; antacids; and any medication prepared to be used in the eyes, ears, or nose. Specifically excluded from the exemption are cosmetics and personal hygiene items like deodorant and mouthwash.
- South Carolina– OTC medicines are exempt from tax when they are sold to a health care clinic that provides medical care without charge to its patients.
- Texas– OTC medicine is exempt if it is required to be labeled with a “Drug Facts” panel by the federal Food and Drug Administration.
- Missouri– OTC medicine is exempt from tax when purchased by an individual with a disability or by the individual’s agent.
The following thirty-three (33) states tax OTC medicine: Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Hawaii, Idaho, Illinois (subject to a low rate of tax), Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Mississippi, Nebraska, Nevada, New Mexico, North Carolina, North Dakoda, Ohio, Oklahoma, Rhode Island, South Dakoda, Tennessee, Utah, Washington, West Virginia, Wisconsin and Wyoming.
If you have any thoughts or concerns on the forgoing, please feel free to contact me at 855-995-6789 or jdumler@salestaxhelp.com.
