Monday, August 09, 2010

Drugs, Medical Supplies and Durable Medical Equipment

One of the most universal sales and use tax exemptions is for prescription drugs. Every state grants either a full exemption, or taxes these items at a reduced rate. From then on it gets complicated.

Factors that affect the prescription drugs exemption include:

-whether or not a prescription was actually written, or if it is just a drug that must be sold by prescription (think complimentary drugs given by doctors or samples to doctors from drug manufacturers)

-most states require the drug be for human use (as opposed to Fido).

Some states (not many) grant an exemption for pretty much all drugs and medications, whether prescribed or not. This would include aspirin, cold medications, etc. But the exemption may not extend to food supplements and vitamins.

Some states grant an exemption for medical supplies, like bandages. Sometimes these are only exempt when sold to medical practitioners, and other times the exemption is open to everyone. Most states grant exemptions for specific things like blood, and diabetes and colostomy materials.

And then there's durable medical equipment which includes everything from artificial limbs to wheel chairs. States get really specific on these particular items, but they frequently grant broad exemptions if the equipment is for home use and/or it's sold by prescription.

Remember, every state is different. But at least with this exemption, the details are comparatively easy to find. Since this is an exemption that affects voters, you'll often see easier-to-read publications on the state's web site that go into the details of the exemption, with lists and explanations. If that publication isn't available, there will probably be a particular regulation which should be comparatively easy to find. Or a bulletin for that matter.

See this article on why this exemption exists.

The Sales Tax Guy

See the disclaimer - this is for education only. Research these issues thoroughly before making decisions. Remember: there are details we haven't discussed, and every state is different. Here's more information

Get these articles in your inbox - subscribe at

Don't forget our upcoming seminars and webinars.


davidwhite214 said...

When we but that durable medical equipment stuff does it already include the tax fee?

Jim Frazier said...

Not sure what you mean here? And it'll probably vary by state, so what state are you asking about?