Vitamins, supplements and sales tax – the latest

The common definition of dietary supplements and vitamins is a non-food item that includes a vitamin, mineral, herb, botanical, amino acid or dietary substance. So are supplements and vitamins taxable? The answer: “Sometimes.”

Sometimes a state considers supplements and vitamins as drugs, groceries or food. Sometimes these products are taxable tangible personal property, sometimes not. In other instances, vitamins and supplements aren’t taxed at all.

It’s enough to make you reach for the B2 and the magnesium (both recommended in the non-drug world for migraines). How do you handle sales tax liability if you sell vitamins, dietary supplements or other items in this nebulous category?

Detailed labels, latest developments

Some states determine the taxability and tax-exempt status of the products based on labels; mention of no less than the U.S. Food and Drug Administration matters in many states. The ingredient list can create sales tax obligations, and sometimes (there’s that word again) the label doesn’t matter if these products are simply not considered “food” and are generally taxable.

The products incur sales tax in most states (Massachusetts casts an especially wide net) but are more or less exempt in Connecticut, Florida, Maryland, Michigan, New Jersey, New York, Texas, West Virginia and Wyoming. Special, more detailed conditions for sales tax or exemptions on these products apply in California (depending on calorie count and ingredients), the District of Columbia (double check the fine print definitions), New Mexico, Pennsylvania and (possibly) Virginia.

Mississippi exempts vitamins and supplements purchased with food stamps; Vermont does so for purchases through the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).

Vitamin and supplement labels can also have “drug facts” that would likely trigger tax as a prescription or nonprescription drug – though if prescribed by a physician vitamins and supplements are exempt from sales tax in Alabama, Indiana, Iowa, Maine, and possibly Hawaii.

Vitamins and supplements can be caught up – or excluded – as states continue to change how they levy sales tax on food and groceries:

• One recent sales tax holiday in Tennessee omitted dietary supplements (along with pet food, alcoholic beverages, candy and any food sold warm).
• In Kansas, vitamins and supplements encounter a reduced rate of sales tax (part of a general reduction in sales tax on food products) before they incur no sales tax starting next Jan. 1.

Selling vitamins and supplements – especially in more than one state – is one of the most complex areas of sales tax. And we don’t mean “sometimes.”

Let TaxConnex manage the burden of keeping up with all the changes and challenges that come with "Are vitamins and supplements taxable?" and their compliance. Contact us to learn what it means when sales tax compliance is all on us.