How to calculate sales tax on makeup and beauty supplies
Updated December 2020.
When customers buy makeup and beauty supplies, they know they’ll be paying sales tax. However, there are instances where buyers don’t pay sales tax on the beauty products. This is especially true in a situation where a customer is purchasing a product to resell in a salon or other business setting.
Here are a few specifics on sales tax and beauty supplies.
In-state sales of cosmetics to customers are taxable under current state and local tax rates, assuming a business is located in a state that has a sales tax. In the few states without sales tax, none applies.
Yet not every business needs to collect sales tax in every state. For sellers who cross state lines, sales tax only applies if they have a sales tax nexus in the buyer's state, also known as "nexus." Nexus can be established when a business has a physical presence in a state, such as a traveling sales rep. It can also be created solely through sales or transaction volume in a state (i.e., economic nexus).
Nexus is especially relevant to beauty suppliers, since they’ll often have representatives in multiple states working with salon professionals. If retailers or direct sales reps plan to use the cosmetics they purchase for makeovers, they’ll need to pay sales tax when they purchase the items from the distributor.
Hairstylists and other salon professionals usually buy their products from beauty supply stores. These shops collect tax on items like scissors, mirrors, and even the furniture in a beauty salon at the time of purchase. But there can be confusion surrounding the products salon professionals purchase for resale.
Since they'll collect sales tax when they sell these to the customer, industry workers shouldn’t pay taxes at the time they buy the items. To sell items tax-free to customers, suppliers should ask for a completed resale certificate as required by local laws.
In many states, services such as haircuts and coloring are sales tax exempt. However, South Dakota is one of four states that tax most services, including most salon services. Sales tax rules can also vary by city: In New York state, for example, salon services exempt from sales everywhere except New York City.
But many salons and spas bring in extra money through the sale of products from styling gel to aromatherapy candles. As in any retail shop, products are generally subject to state and local sales tax, which means a salon will need to apply for a business permit to collect and remit sales tax on these sales.
Since many salons purchase items both for resale and for use in servicing customers, it’s important to distinguish between the two. Items purchased for resale can be purchased tax free with a valid resale certificate, while sales or use tax is due on items purchased for use by stylist and other employees.
Professional makeup artists for film, TV, or theater production may be able to purchase the cosmetics and applicators they use tax free. This is true in New York, but in California and Utah, only the service of applying makeup is tax-exempt. In those states, the makeup artist pays sales tax on cosmetics at the time of purchase. These states generally see the makeup artist, rather than the production company, as the consumer of the product.
Whether or not to charge sales tax on makeup and beauty supplies depends, in part, on the end user of the product. When a professional uses an item to perform a service, that person is expected to pay sales or use tax unless a specific exemption applies. However, when a product is purchased for the purpose of reselling, the customer will ultimately pay tax, which means the professional should present reseller documentation. Professionals and beauty suppliers should check with their local tax laws for specifics.
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.