Selling medical supplies? Know what's exempt and what's taxed
Some of the products on the shelves of medical supply store may be tax exempt. As always state sales tax laws vary from place to place, so check out the rules in your area before selling or buying medical supplies.
To help you break it down, here are some examples of taxation requirements that may apply in your area.
The end user of the medical supplies can impact taxability. Are the supplies being sold to consumers or medical professionals? If the product is going to either of these types of buyers, there may be instances where the medical equipment is exempt from sales tax.
If the supply is used to cure disease and is intended for use on one patient rather than multiple patients, medical professionals may not have to pay sales tax on those items. However, if the item is used in the daily operation of the hospital and reused on multiple patients, it may not be exempt.
Disposable medical supplies are used on only one patient and therefore would fall under the exempt category.
Products for use in home
Some medical equipment designed for use in the home is eligible for an exemption, including wheelchair trays, geriatric care, apnea monitors, and blood glucose monitors. Items that may require sales tax in your state include air humidifiers, massagers, lift chairs, and adjustable beds that aren’t hospital beds.
The words “for use in the home” can apply to either a person’s residence or a nursing home, as long as nursing home-based equipment is confined primarily to its owner’s private room.
Many consumers must wear eyeglasses and contact lenses to navigate through the day, but vision insurance coverage can be disappointing. One small cost savings consumers can achieve is a sales tax break on eyeglasses and contact lenses, which is now in effect in some states. For businesses that sell vision correction products, it’s important to note that the customer must have a prescription to qualify.
Dental offices often sell products to patients for a fee that may or may not be covered by insurance. As long as the items are not available over the counter, the dental office may not have to pay sales tax when purchasing the items or charge sales tax when selling them to consumers.
Dental offices regularly dispense over-the-counter products such as toothbrushes and dental floss, which require sales tax. But items like prescription mouthwash, prosthetic devices, and needles and syringes are sales tax exempt in many states.
Navigating the murky waters of medical supply sales tax can be tricky. Carefully peruse the laws in your state and make sure you’re charging sales tax where it’s required. Also pay careful attention to the items you’re purchasing for resale and make sure your suppliers are charging sales tax when they’re required to by law.
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
Stay up to date
Sign up for our free newsletter and stay up to date with the latest tax news.