Sales Tax on Exercise Equipment and Gear
- Feb 8, 2017 | Stephanie Faris
Fitness is an important part of getting and staying healthy, reducing illness, and prolonging life. In most states, gyms and health clubs charge sales tax on membership based on local sales and use tax laws relating to services. But what about the equipment and apparel used for working out? For the most part, taxpayers won’t find tax relief there. Here are some sales tax specifics regarding exercise equipment, gear, and apparel used for fitness.
Fitness Equipment and Gear
Consumers often question whether a purchase of exercise equipment is deductible when a doctor prescribes it. In New York, cardiovascular and strength-training equipment are exempt when prescribed by a medical professional. To qualify, the equipment must be primarily and customarily used for medical purposes and cannot be useful when an injury isn’t present. So an item like a treadmill or stair climber wouldn’t be sales tax-exempt, even if the item helps in recovery from a disability or injury, since it could be useful to that person if the injury was nonexistent.
As LA Fitness recently learned, gyms and other health centers are required to pay sales tax on their purchases of fitness equipment and gear. LA Fitness had originally argued that because customers are paying a monthly rental to use the equipment, it was essentially being purchased for resale and therefore tax shouldn’t be due. However, the court ruled that a fitness membership is not a lease of equipment. Fitness centers are merely providing access to members who may or may not use such equipment while in the building.
Clothing is taxed in most states, but some states exempt clothing with exceptions, such as dollar amount limits. In most of those states, the exemption doesn’t extend to athletic clothing. At this time, only New York exempts fitness wear from sales tax. In states that have sales tax holidays that encompass clothes, some or all types of athletic wear may be excluded. Connecticut, for instance, exempts gym suits and sports uniforms on its tax holiday but not athletic shoes or sports uniforms.
Even when recommended by a doctor, fitness wearables like FitBits are subject to sales tax under local laws. They are treated as any other retail item. However, wearables have now gone beyond fitness to test insulin levels and other health conditions. In those cases, a fitness wearable may qualify for sales tax exemption as a testing supply.
Staying healthy is rarely cheap, but consumers can save on sales tax if they search for sales tax exemptions. In states where sales tax holidays apply to fitness apparel, taxpayers should stock up on those items that are tax-exempt to save money. As fitness wearables continue to move into healthcare, consumers may begin to see more tax exemptions in that area, as well.