Many people start the new year trying to get healthier. As part of this resolution, some people turn to dietary supplements and vitamins to up their intake of certain nutrients. Adding these items are a quick way to achieve this goal, but, I’m sure you’re wondering, are these products subject to sales and use tax? In short, the answer varies from state to state.
The Streamlined Sales and Use Tax Agreement has a rather exacting definition for dietary supplements. Specifically, the Agreement defines a dietary supplement as any product, other than “tobacco,” intended to supplement the diet that contains a vitamin, mineral, herb, or other botanical, amino acid, dietary substance for use by humans to supplement the diet by increasing the total dietary intake, or a concentrate, metabolite, constituent, extract, or combination of any ingredient described in the previous items. Additionally, to qualify as dietary supplements, such products must be intended for ingestion in tablet, capsule, powder, soft-gel, gel-cap, or liquid form, or, if not intended for ingestion in such forms, are not represented as conventional food and are not represented for use as the sole item of a meal or diet and must be labeled as a dietary supplement.
Most member states of the Streamlined Sales and Use Tax Agreement exclude dietary supplements from the definition of food and tax them as they do other types of tangible personal property. Some states, like Kansas, tax dietary supplements unless they are sold with a prescription.
Illinois, a non-member state, takes a different approach and taxes vitamins, food supplements, and meal replacement drink mixes that make medicinal claims at the reduced tax rate that is applicable to drugs. Other vitamins and supplements that do not make medicinal claims are considered foods and are taxed at the reduced tax rate that is applicable to food. Luckily for taxpayers, the reduced tax rate for food and for drugs is the same—1 percent.
Regardless of how dietary supplements are taxed, here’s hoping everyone has a healthy start to the new year.
Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: How should the states tax dietary supplements?
Get a free trial to Bloomberg BNA Tax & Accounting's State Tax solution, a comprehensive research service that provides deep analysis and time-saving practice tools to help practitioners make well-informed decisions.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)