Updated March 2021
With a pandemic in the headlines, plenty of people have medicine and healthcare on their minds. So we thought we would take a look at which states charge sales tax on medication, both prescription and over-the-counter.
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.
[sc name=”drift”]
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. For sales tax on supplements, use this blog post as reference.
In which states is prescription medication taxable?
Good news! Prescription drugs are almost always exempt from sales tax.
The exception is Illinois, where 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.
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.
Also, in many cases, nonprescription drugs are non-taxable if they are prescribed by a doctor. We recommend checking with your state’s taxing authority or a sales tax expert if you have questions about any particular sales tax use cases when it comes to medication.
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 tax exempt. See a list of tax exempt nonprescription medication in Florida here.
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 “Drugs and Over-the-Counter Drugs”)
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. 29)
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.
TaxJar Handles Drug and Medication Taxability
If all this has your head spinning, don’t worry. The TaxJar 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 – Non-prescription drugs (for human use)
- 51020 – Prescription drugs (for human use)
- 51030 – Over-the counter drugs with a prescription (for human use)
We also have product tax codes for medical supplies and devices such as at home oxygen or dialysis equipment. Sell medical supplies and want to make sure TaxJar supports you? Reach out to one of our sales tax experts.
From there, the TaxJar API automatically charges your customer in any state the right amount of sales tax depending on that state’s applicable laws.
Find out more about the TaxJar API here. Or try for yourself with our TaxJar API demo!
