Product Taxability Sales Tax 101

Sales Tax by State: Is Prescription and Nonprescription Medication Taxable?

by Jennifer Dunn

Map of states where nonprescription drugs are taxable

Last month, CNBC broke the news that online retail giant Amazon is considering selling prescription drugs through their platform. Of course, selling pharmaceuticals comes with a boatload of regulations, but another hurdle Amazon will have to cross is discovering when and where to collect sales tax on prescription medication.  So, we decided to take a look at where prescription (and nonprescription) drugs are taxable in the United States.

This post will explore the taxability of the following types of medications:

  • Prescription drugs
  • Nonprescription drugs for humans sold without a prescription

The following will lay out generally which states consider these different types of drugs to be taxable or non-taxable, with a couple of exceptions:

  • Animal medication – Some states treat medication for animals differently than medication for humans when it comes to sales tax.
  • Other drugs – Some states also sometimes also have special tax treatment for oxygen, chemotherapy drugs and insulin.

We suggest checking with your individual state or obtaining professional guidance if you sell any of the above items.

Important to Note: This blog post is for informational purposes only and will provide you with a starting point in your research. Every state is different when it comes to sales tax. Also, while we will strive to keep this post up to date, note that each individual state’s sales tax rules and laws change constantly. If you need help deciding whether to charge tax on your products, we recommend you contact your state’s taxing authority or a vetted sales tax expert.

What about Sales Tax on Supplements?

Do not use this list to determine the taxability of supplements. In most states, supplements are taxed as if they were food, but with notable exceptions. We’ll write a future blog post about the taxability of supplements.

TaxJar’s SmartCalcs Sales Tax API Handles Drug and Medication Taxability

If all this has your head spinning, don’t worry. TaxJar’s SmartCalcs Sales Tax API allows you to assign a product tax code to the products you sell.

First, just assign the proper tax code to your product. The produce tax codes for drugs are:

  • 51010 – Drugs for human use without a prescription
  • 51020 – Drugs for human use with a prescription

From there, TaxJar SmartCalcs automatically charges your customer in any state the right amount of sales tax depending on that state’s applicable laws.

Find out more about SmartCalcs here and sign up for a 30-day free trial. Or try for yourself with our SmartCalcs sales tax API demo!

In which states is prescription medication taxable?

Good news! Prescription drugs are almost always exempt from sales tax.

This is except for limited instances in two states:

  • Illinois – Prescription drugs are taxed at the state level, but at a reduced state rate of 1%. All drugs (prescription and nonprescription) are tax exempt at the local level.
  • Louisiana – Prescription drugs are tax exempt at the state level, but local areas can opt to tax them.

In which states is nonprescription medication taxable?

This is a list of how each state considers nonprescription medication to be taxed. Most states consider nonprescription medication to be taxable. In state that do not consider prescription drugs taxable, we’ve included sources so you can double check your specific use case against the state’s tax code to ensure that you are charging sales tax correctly.

Alabama – Nonprescription medication is taxable.

Arizona – Nonprescription medication is taxable.

Arkansas – Nonprescription medication is taxable.

California – Nonprescription medication is taxable.

Colorado – Nonprescription medication is taxable.

Connecticut – Nonprescription medication is tax exempt in Connecticut. (Source)

Florida – Nonprescription medication is taxable.

Georgia – Nonprescription medication is taxable.

Hawaii – Nonprescription medication is taxable.

Idaho – Nonprescription medication is taxable.

Illinois – Nonprescription medication is taxable at a statewide reduced rate of 1%. It is exempt from local tax. (Source)

Indiana – Nonprescription medication is taxable.

Iowa – Nonprescription medication is taxable.

Kansas – Nonprescription medication is taxable.

Kentucky – Nonprescription medication is taxable.

Louisiana – Nonprescription medication is taxable.

Maine – Nonprescription medication is taxable.

Maryland – Nonprescription medication is tax exempt in Maryland. (Source)

Massachusetts – Nonprescription medication is taxable.

Michigan – Nonprescription medication is taxable.

Minnesota – Nonprescription medication is tax exempt in Minnesota. (Source)

Mississippi – Nonprescription medication is taxable.

Missouri – Nonprescription medication is taxable.

Nebraska – Nonprescription medication is taxable.

Nevada – Nonprescription medication is taxable.

New Jersey – Nonprescription medication is tax exempt in New Jersey. (Source, p. 42)

New Mexico – Nonprescription medication is taxable.

New York – Nonprescription medication is tax exempt in New York. (Source)

North Carolina – Nonprescription medication is taxable.

North Dakota – Nonprescription medication is taxable.

Ohio – Nonprescription medication is taxable.

Oklahoma – Nonprescription medication is taxable.

Pennsylvania – Nonprescription medication is tax exempt in Pennsylvania. (Source, p. 27)

Rhode Island – Nonprescription medication is taxable.

South Carolina – Nonprescription medication is taxable.

South Dakota – Nonprescription medication is taxable.

Tennessee – Nonprescription medication is taxable.

Texas – Nonprescription medication is tax exempt in Texas. (Source)

Utah – Nonprescription medication is taxable.

Vermont – Nonprescription medication is tax exempt in Vermont. (Source)

Virginia – Nonprescription medication is tax exempt in Virginia. (Source)

Washington – Nonprescription medication is taxable.

Washington D.C. – Nonprescription medication is tax exempt in Washington D.C. (Source)

West Virginia – Nonprescription medication is taxable.

Wisconsin – Nonprescription medication is taxable.

Wyoming – Nonprescription medication is taxable.

Do you have questions or something to say about the taxability of prescription drugs and medication? Start the conversation in the comments!

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