A Dozen States Taking Steps to Ban Tampon Tax

The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.

By Michael J. Bologna

March 24 — Efforts to end the so-called “tampon tax” are gaining traction across the country after a decade of inaction, with legislative bodies in states and municipalities taking up feminine hygiene tax exemption measures and at least one group of consumers filing a class action claim seeking to bar New York's revenue agency from collecting sales tax on such products.

On the legislative front, the Chicago City Council recently passed an ordinance that exempts tampons and sanitary napkins from the city's municipal sales tax. Similar proposals exempting the products are being debated this spring in nearly a dozen state capitols. Five states already exempt tampons and sanitary napkins from sales tax.

In a similar vein, at least a five states are considering legislation that would create a sales tax exemption for baby diapers. The states include California, Connecticut, Illinois, Maryland and Tennessee. The exemption is currently available in Massachusetts, Minnesota, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.

Alison Weir, director of policy, research and analysis for the National Diaper Bank Network, said the tampon tax question has laid largely dormant for a decade in state legislatures. She said renewed interest in the tax issue is due in part to action in other nations.

International Action

In July 2015, Canada suspended its goods and services tax on feminine hygiene products. Last week U.K. Prime Minister David Cameron announced Britain would no longer tax tampons and sanitary napkins. The announcement follows an agreement by European Union leaders that is expected to place feminine sanitary products in the same category as other essentials excluded from the VAT .

Weir, whose advocacy group is focusing on tax fairness for consumers purchasing tampons and diapers, expressed frustration with state laws that extend tax breaks on foot powder and lip balm, but ignore many items of true medical necessity.

“This doesn't make sense because we don't tax, in a lot of cases, medicines and over-the-counter drugs,” Weir told Bloomberg BNA March 23. “We don't tax food. We don't tax the things that are essential to the health and safety of people. And when you are talking about something like a diaper or a tampon, which tend to be pretty expensive for what it is, the folks using them are often financially disadvantaged. So every little bit helps when you want to maintain the health and welfare of the population.”

Illinois state Sen. Melinda Bush (D), who is pushing legislation to exempt feminine hygiene products in her state, said “my view is pretty simple: women know their period isn't a luxury and it shouldn't be taxed like one. These products are necessities.”

Exempted in Five States

According to the National Conference of State Legislatures, feminine hygiene products are currently exempt from taxation in:

• Maryland, which offers a sales tax exemption on medicine and medical equipment that includes sanitary napkins, tampons, baby oil and baby powder;
• Massachusetts, which offers a sales tax exemption on several health products including sanitary napkins and tampons;
• Minnesota, which provides a sales tax exemption on drugs and medical devices, including “sanitary napkins, tampons, or similar items used for feminine hygiene;”
• New Jersey, which provides a sales tax exemption on, “feminine hygiene products such as tampons, sanitary napkins and panty liners;” and
•  Pennsylvania, which created a sales tax exemption covering, “hygiene products including diapers, wet wipes, toilet paper, feminine hygiene items, toothbrushes, and toothpaste.”


Weir, who maintains a legislative database on state sales tax exemptions, said nearly a dozen states are considering bills addressing the tax treatment of tampons and sanitary napkins. The states include California, Connecticut, Illinois, New York, Ohio, Rhode Island, South Carolina, Tennessee and Wisconsin. She noted that both Utah and Virginia considered bills in recent weeks, but the proposals ultimately failed.

California's legislative proposal, A.B. 1561, is attracting bipartisan support.

In January, A.B. 1561 was jointly introduced by Assemblymember Cristina Garcia (D) and Assemblymember Ling Ling Chang (R). The bill would exclude tampons from state and local sales tax, which range as high as 9 percent depending on in which county the products are purchased. Garcia said the tax is essentially discriminatory.

“Basically we are being taxed for being women,” Garcia said in a statement in January when the bill was introduced. “This is a step in the right direction to fix this gender injustice.”

Chicago and Illinois

Action is being seen on two fronts in Illinois.

On March 16 the Chicago City Council passed an ordinance that characterizes tampons and sanitary napkins as “medical appliances” and thus exempt from Chicago's 1.25 percent municipal retailer's occupation tax.

Aldermen recognized that their action would peal off just a small portion of the tax and supported a resolution calling for similar action by the Illinois General Assembly. Feminine hygiene products are currently taxed at a 10.25 percent rate in Chicago. In addition to Chicago's 1.25 percent city tax, the rate includes a 6.25 percent state sales tax, a 1.75 percent county tax and a 1 percent regional transportation authority tax.

Illinois' Sen. Bush is seeking to address the issue with S.B. 2746, which would exempt feminine hygiene products and incontinence products from state sales tax by classifying them as medical appliances, rather than “grooming and hygiene products.” Bush emphasized that feminine hygiene products were exempt from taxation in Illinois for more than 20 years under a regulation by the Illinois Department of Revenue (IDOR) that was later affirmed by the Illinois Supreme Court.

Supreme Court Ruling

Michael Wynne, a partner with Reed Smith LLP and a former IDOR general counsel, said the department construed tampons and sanitary napkins as medical appliances, and thus exempt from taxation, under a 1985 regulation. The issue was challenged a few years later in a class action suit that objected to a conflicting interpretation by Chicago.

Wynne said the issue eventually had to be decided by the Illinois Supreme Court in Geary v. Dominick's Finer Foods Inc. 129 Ill. 2d 389 (1989) 544 N.E.2d 344. The court affirmed the department's view that tampons and sanitary napkins must be classified as medical appliances, exempt from both state and city sales tax.

Wynne said Illinois treated the products as tax-exempt medical appliances for 20 years, but the regulations were modified in 2009 when the state attempted to conform to certain features of the streamlined sales tax initiative.

“Illinois never jumped onto streamlined sales tax, but the Department of Revenue amended some of its regulation in 2009,” Wynne said in an interview. “It adopted a definition of medical appliances which by regulation determined that hygiene products were no longer exempt.”

The revenue department emphasized that the new regulations voided the previous exemption in an Aug. 31, 2009, General Information Letter, which stated “feminine hygiene products such as tampons and pads, are grooming and hygiene products and subject to tax at the high rate.”

Bush described the current tax treatment of feminine hygiene products in Illinois as a regulatory mishap and expressed optimism that the legislature would approve the corrections envisioned in S.B. 2746.

“I think our chances are very good,” she said. “I can't imagine anyone is going to oppose a Supreme Court ruling that clearly moves this into the column where you don't pay taxes. This is not a choice, it's a medical necessity.”

New York Litigation

Advocates in New York used the Illinois Supreme Court's precedent in Geary to make their case for tax fairness regarding feminine hygiene products.

On March 3, women associated with the group Racket, a nonprofit that advocates for “shame-free periods” for all women and provides feminine hygiene products to homeless women in New York City, filed a class action against the New York State Department of Taxation and Finance seeking to halt the tampon tax. The suit alleges New York's tax treatment of feminine hygiene products is essentially discriminatory and violates the equal protection clauses of both the New York and federal constitutions (Seibert v. New York Dept. of Taxation and Finance, No. 151800 / 2016, complaint 3/3/16).)

The suit states that New York exempts medical items from sales tax, but imposes a “double standard” when defining the exemption for women and men. On this point, the suit notes Rogaine, foot powder, dandruff shampoo, chap stick, facial wash, adult diapers and incontinence pads aren't subject to taxation, but tampons and sanitary pads are taxed. The suit asserts this policy is irrational and discriminatory.

“Justice Scalia once wrote for the Supreme Court that, ‘a tax on wearing yarmulkes is a tax on Jews.’ A tax on tampons and sanitary pads is a tax on women,” the suit states. “The Tampon Tax is irrational. It is discrimination. It is wrong. Defendants should be required to follow the law, and return the many millions of dollars they took illegally at the expense of women's health.”

Plaintiff attorney Zoe Salzman, a partner in the New York firm Emery Celli Brinckerhoff & Abady LLP, said New York's current posture reflects an antiquated tax code written and administered by men.

“Tampons and sanitary pads are a necessity for women, not a luxury,” Salzman said in a statement. “There is no way these products would be taxed if men had to use them.”

Geoffrey Gloak, a spokesman for New York's revenue department, said the agency wouldn't comment on pending litigation.

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com