Drugstores and Pharmacies

Tax Bulletin ST-193 (TB-ST-193)

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Issue Date: August 5, 2014

Introduction

This bulletin explains how sales tax applies to items commonly sold by drugstores and pharmacies. See also Tax Bulletins Convenience Stores and Bodegas (TB-ST-135), and Coupons and Food Stamps (TB-ST-140). Information regarding sales of medical equipment and prosthetic devices can be found in Publication 822, Taxable Status of Medical Equipment and Supplies, Prosthetic Devices, and Related Items.

Drugs and medicines

Sales of drugs and medicines are not taxable if the drug or medicine is intended for internal or external use in people to diagnose, cure, treat, or prevent illness or disease. This includes both prescription and nonprescription drugs and medicines that are recognized by the United States Pharmacopeia, the Homeopathic Pharmacopeia of the United States, or the National Formulary.

Prescription drugs and medicines are used under the supervision of a licensed physician and must be obtained from a licensed pharmacist. They include:

• antibiotics
• narcotics
• controlled substances

Nonprescription or over-the-counter drugs and medicines can also be purchased exempt from sales tax. They include:

• pain relievers (aspirin, ibuprofen, etc.)
• antacids
• cough and cold remedies
• dandruff shampoo and treatments

Other medicinal products used internally or externally by humans for the preservation of health, and products (other than food) that are intended to affect the structure or a function of the human body, are also exempt from sales tax. These products, which are not ordinarily considered drugs or medicines, include:

• acne preparations
• contact lens preparations
• eye drops
• laxatives
• lip balm intended to treat or prevent chapped lips
• petroleum jelly that is uncolored and unscented
• products that treat nicotine withdrawal symptoms
• products that prevent or treat athlete’s foot or other fungus infections
• products intended to treat sunburns
• sunscreens
• vaginal creams, foams, ointments, and jellies that treat specific medical conditions

Family planning

Products sold to reduce the chance of pregnancy are not taxable. These products may be sold by prescription or over the counter.

Examples of these items include:

• birth control pills
• condoms
• contraceptive creams, foams, jellies, or sponges
• diaphragms
• vaginal suppositories

Cosmetics and toiletries

Cosmetic and toiletry products are used for cleansing, personal grooming, beautifying, or altering your appearance. These products are taxable even if they contain some medicinal ingredients. See the Cosmetics and toiletries chart below.

General merchandise

Many drugstores and pharmacies sell a variety of general merchandise that is generally taxable. See the General merchandise chart below.

Food and beverages

Drugstores and pharmacies often also sell a variety of food and beverages. See Tax Bulletin Listings of Taxable and Exempt Foods and Beverages Sold by Food Stores and Similar Establishments (TB-ST-525) for detailed information on sales of food and beverages.

Insurance coverage

The taxability of an item does not change when payment is made under medical insurance coverage, including:

• personal insurance,
• an employer-sponsored medical plan,
• Medicaid, or
• Medicare.

Nontaxable items remain nontaxable regardless of the method of payment. Taxable items remain taxable even when paid for under insurance coverage.

The charts below list examples of:

• taxable cosmetics and toiletries; and
• taxable general merchandise commonly sold by drugstores and pharmacies.

Note: A Tax Bulletin is an informational document designed to provide general guidance in simplified language on a topic of interest to taxpayers. It is accurate as of the date issued. However, taxpayers should be aware that subsequent changes in the Tax Law or its interpretation may affect the accuracy of a Tax Bulletin. The information provided in this document does not cover every situation and is not intended to replace the law or change its meaning.