If you sell dietary supplements, you have likely already faced the question of whether your products or taxable or not.
Some states consider supplements grocery items because they often have “nutrition facts” labels rather than “supplement facts” or “drug facts” labels.
Other states lump dietary supplements in with other generic “tangible personal property” and consider them to be fully taxable.
And still other states make a distinction between prescription and nonprescription dietary supplements when it comes to sales tax. For example, Alabama considers dietary supplements non-taxable but only if they are prescribed by a licensed medical practitioner.
And last but not least, dietary supplements are not always pills. They can come in the form of powders or even bars. When selling a product, determine if it makes claims such as alleviating a vitamin deficiency. If it does, it may look like a food bar, but actually be taxed as a supplement.
If you sell dietary supplements, you’re probably scratching your head. Are you required to collect sales tax on dietary supplements in your state?
The list below will point you in the right direction when it comes to the taxability of dietary supplements. Of course, this post is for general purposes only and we always recommend speaking with the state’s taxing authority or a vetted sales tax expert if you have specific questions about the taxability of your product.
List of states where dietary supplements are tax exempt or taxed at a lower rate
If a state isn’t on the list, they do not specify any special tax treatment for dietary supplements as of this writing.
Massachusetts – Some “edible” dietary supplements are considered food and not subject to sales tax. However, other dietary supplements sold as “medicines, tonics,” or in “liquid, powdered, granular, tablet, capsule, lozenge and pill form” are not considered food products and are subject to sales tax. Read more in Massachusetts Directive 00-6 or the Massachusetts law code section 64(h).
Pennsylvania – Food supplements such as vitamins and therapeutic nutritional supplements sold from “other than a caterer or established selling ready-to-eat food” are considered non-taxable in Pennsylvania (Source)
Utah – Dietary supplements with a nutritional label are considered grocery food and are taxed at Utah’s reduced grocery sales tax rate. At the time of this writing, that sales tax rate is a combined 3% across Utah. (Source)
Frequently Asked Questions
My products have a “drug facts” and not a “nutrition facts” or “supplement facts” label. Are they taxable?
These products would likely be taxed as a prescription or nonprescription drug. You can find out more about the taxability of prescription and nonprescription drugs here. Note that some states may also tax certain drugs, such as medicine for animals, oxygen therapy or insulin, differently.
I’ve read the law and I’m still not sure if my products are taxable or tax exempt. What can I do?
How can I automate sales tax collection so I always collect the right amount of sales tax from every buyer in every state?
Sales tax on dietary supplements can be confusing. Some states consider them “tangible personal property” and want businesses to take them at the full rate. Other states consider them groceries, and consider them tax exempt or taxed at a lower rate.
This is where TaxJar can help. With the TaxJar API, all a business needs to do is apply the Product Tax Code for Dietary Supplements to each SKU and TaxJar will ensure you collect the correct amount of sales tax. No more overcharging sales tax and creating a negative customer experience and no more overcharging and owing sales tax out of your pocket.
To learn more about TaxJar and get started, visit TaxJar.com/how-it-works.