Does Illinois sales tax apply at the full rate or the reduced 1% rate to dental fluoride varnish and similar medical devices sold to professionals?

Plain-English summary

A company that sells dental fluoride varnish exclusively to dental offices asked the Illinois Department of Revenue whether its product qualifies for a sales tax exemption or a special reduced rate as a medical device. The fluoride varnish is FDA-regulated as a Class II medical device, requires 510(k) clearance, and is applied only by dental professionals in-office -- it is not sold as a take-home or over-the-counter consumer product.

Because this was a General Information Letter (GIL) rather than a Private Letter Ruling (PLR), the Department did not issue a binding, fact-specific answer. Instead, it explained the general framework: Illinois taxes most tangible personal property at the standard 6.25% state rate (plus local taxes), but drugs, medicines, and medical appliances that qualify under 86 Ill. Adm. Code 130.311 are taxed at a reduced 1% state rate. Items regulated as Class III medical devices used for cancer treatment under a prescription, along with related accessories, also get the 1% rate, as do insulin, diabetic testing supplies, and vehicle modifications for people with disabilities.

The Department then walked through the regulatory definitions relevant to the taxpayer's question: a "medicine or drug" is a preparation that makes a written medicinal claim on its label (to cure, treat, or mitigate disease, illness, injury, or pain); a "medical appliance" is an item that directly substitutes for a malfunctioning body part (artificial limbs, dental prostheses, braces, wheelchairs, pacemakers, dialysis machines, hearing aids, glasses, contact lenses, and diabetic glucose monitors are named examples); and "grooming and hygiene products" (soaps, shampoo, toothpaste, mouthwash, antiperspirants, suntan products) are excluded from the reduced rate unless available by prescription only, regardless of medicinal claims.

The letter does not say which category the fluoride varnish falls into. It leaves that determination to the taxpayer (or a taxpayer who wants a binding answer would need to request a PLR under 2 Ill. Adm. Code 1200.110).

What this means for you

Sellers of dental and medical products

If you sell a product used exclusively by licensed professionals (like fluoride varnish applied by dentists), FDA classification alone does not settle the Illinois sales tax rate. You need to determine whether your product fits the regulatory definition of a "medicine or drug" (has a medicinal claim on the label) or a "medical appliance" (substitutes for a malfunctioning body part) under 86 Ill. Adm. Code 130.311. If it fits either, the reduced 1% state rate applies instead of the general 6.25% rate.

Businesses wanting a binding answer

A GIL like this one is not binding on the Department -- it only points to the relevant rules. If you need certainty for your specific product and fact pattern, you must request a Private Letter Ruling (PLR) under 2 Ill. Adm. Code 1200.110, which is binding on the Department as to your facts.

Accountants and tax professionals

Remember the three-tier rate structure the letter confirms: 6.25% general merchandise (plus local tax) as the default; 1% for qualifying prescription/nonprescription drugs, medicines, and medical appliances under 35 ILCS 120/2-10 and 86 Ill. Adm. Code 130.311; and full taxation for grooming/hygiene products even when they carry a medicinal-sounding label claim, unless prescription-only.

Common questions

Q: Did the Department rule that fluoride varnish is tax-exempt or taxed at 1%?
A: No. This GIL only explains the definitions and rate structure; it does not apply them to the taxpayer's specific product. A binding determination would require a Private Letter Ruling.

Q: What is the general Illinois sales tax rate versus the reduced rate for medical items?
A: The general merchandise rate is 6.25% (plus applicable local taxes). Qualifying drugs, medicines, and medical appliances under 86 Ill. Adm. Code 130.311 are taxed at a reduced 1% state rate.

Q: What makes something a "medical appliance" under Illinois rules?
A: An item that is used to directly substitute for a malfunctioning part of the human body -- examples given include artificial limbs, dental prostheses, orthodontic braces, crutches, orthopedic braces, wheelchairs, pacemakers, dialysis machines, hearing aids, eyeglasses, contact lenses, and diabetic glucose monitors and test strips.

Q: Are toothpaste and mouthwash taxed at the reduced rate since they're used in dental care?
A: No. The letter identifies toothpaste and mouthwash as examples of "grooming and hygiene products," which are taxed at the full 6.25% rate regardless of any medicinal claim on the label, unless they are available by prescription only.

Q: What's the difference between a GIL and a PLR?
A: A Private Letter Ruling (PLR) is issued for a specific taxpayer's facts and is binding on the Department for that taxpayer. A General Information Letter (GIL), like this one, only directs the taxpayer to relevant regulations and is not binding on the Department. See 2 Ill. Adm. Code 1200.110 and 1200.120.

Citations and references

Statutes and regulations:

• 35 ILCS 120/2 (Retailers' Occupation Tax Act imposition of tax)
• 35 ILCS 120/2-10 (1% low rate for qualifying drugs, medicines, and medical appliances)
• 35 ILCS 105/3 (Use Tax Act imposition of tax)
• 86 Ill. Adm. Code 130.101 (Retailers' Occupation Tax regulation)
• 86 Ill. Adm. Code 130.311 (Drugs, Medicines, Medical Appliances, and Grooming and Hygiene Products)
• 86 Ill. Adm. Code 150.101 (Use Tax regulation)
• 2 Ill. Adm. Code 1200.110 (Private Letter Ruling procedure)
• 2 Ill. Adm. Code 1200.120 (General Information Letter procedure)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2024.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2024/ST24-0035-GIL.pdf

Original ruling text

ST 24-0035-GIL 10/29/2024 FOOD, DRUGS, & MEDICAL APPLIANCES
This letter discusses drugs and medical appliances. 86 Ill. Adm. Code 130.311.
(This is a GIL.)
October 29, 2024
NAME
COMPANY
ADDRESS
Dear NAME:
This letter is in response to your letter dated October 10, 2024, in which you
requested information. The Department issues two types of letter rulings. Private Letter
Rulings (“PLRs”) are issued by the Department in response to specific taxpayer inquiries
concerning the application of a tax statute or rule to a particular fact situation. A PLR is
binding on the Department, but only as to the taxpayer who is the subject of the request
for ruling and only to the extent the facts recited in the PLR are correct and complete.
Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General
Information Letter (“GIL”) is to direct taxpayers to Department regulations or other sources
of information regarding the topic about which they have inquired. A GIL is not a
statement of Department policy and is not binding on the Department. See 2 Ill. Adm.
Code 1200.120. You may access our website at https://tax.illinois.gov/ to review
regulations, letter rulings and other types of information relevant to your inquiry.
The nature of your inquiry and the information you have provided require that we
respond with a GIL. In your letter you have stated and made inquiry as follows:
I am writing on behalf of COMPANY1 D/B/A COMPANY, a company that
sells dental fluoride varnish exclusively to dental offices for professional
use. We are seeking a tax ruling regarding the sales tax applicability to our
fluoride varnish products.
Our fluoride varnish is classified as a Class II medical device, regulated by
the U.S. Food and Drug Administration (FDA), and requires a 510(k)
clearance. The product is used by dental professionals and is applied
directly to patients’ teeth during dental appointments. It is not provided as
a take-home treatment or over-the-counter product for consumers.
We would like to request clarification on whether the fluoride varnish we sell
is exempt from Illinois sales tax under the medical devices exemption or is
subject to a special tax rate due to its classification as a regulated medical
device. Given that the varnish is used exclusively in professional settings

COMPANY/ NAME
Page 2
October 29, 2024
by licensed dental providers, we seek confirmation on the tax status of these
products.
If additional information is required, please feel free to contact me at
PHONE or EMAIL. We appreciate your time and consideration and look
forward to your response.
DEPARTMENT’S RESPONSE:
The Illinois Retailers’ Occupation Tax Act imposes a tax upon persons engaged in
this State in the business of selling tangible personal property to purchasers for use or
consumption. See 35 ILCS 120/2; 86 Ill. Adm. Code 130.101. In Illinois, Use Tax is
imposed on the privilege of using, in this State, any kind of tangible personal property that
is purchased anywhere at retail from a retailer. See 35 ILCS 105/3; 86 Ill. Adm. Code
150.101. These taxes comprise what is commonly known as “sales” tax in Illinois. If the
purchases occur in Illinois, the purchasers must pay the Use Tax to the retailer at the time
of purchase. If the purchases occur outside Illinois, purchasers must self-assess their
Use Tax liability and remit it directly to the Department.
With respect to prescription and nonprescription medicines, drugs, medical
appliances, products classified as Class III medical devices by the United States Food
and Drug Administration that are used for cancer treatment pursuant to a prescription, as
well as any accessories and components related to those devices, modifications to a
motor vehicle for the purpose of rendering it usable by a person with a disability, and
insulin, blood sugar testing materials, syringes, and needles used by human diabetics,
the tax is imposed at the rate of 1%. 35 ILCS 120/2-10. Please see the Department’s
regulation at 86 Ill. Adm. Code Section 130.311, which is its regulation governing Drugs,
Medicines, Medical Appliances, and Grooming and Hygiene Products. Those items that
do not qualify for the low rate of tax are taxed at the general merchandise rate of 6.25%
plus applicable local taxes.
A medicine or drug is any pill, powder, potion, salve, or other preparation for human
use that purports on the label to have medicinal qualities. A written claim on the label
that a product is intended to cure or treat disease, illness, injury, or pain, or to mitigate
the symptoms of such disease, illness, injury, or pain constitutes a medicinal claim. See
Section 130.311 for examples of medicinal claims. Examples of qualifying products
include prescription drugs or medicines and nonprescription drugs or medicines such as
aspirin or other pain relievers that purport on the label to have medicinal qualities.
The term “nonprescription medicines and drugs” does not include grooming and
hygiene products. Grooming and hygiene products include, but are not limited to, soaps
and cleaning solutions, shampoo, toothpaste, mouthwash, antiperspirants, and suntan
lotions and screens, unless those products are available by prescription only. If an item

COMPANY/ NAME
Page 3
October 29, 2024
is a nonprescription grooming and hygiene product, it will be taxed at the State 6.25%
general merchandise rate regardless of any medicinal claims made on the product’s label.
A medical appliance is an item that is used to directly substitute for a
malfunctioning part of the human body. Included in the exemption as medical appliances
are such items as artificial limbs, dental prostheses and orthodontic braces, crutches and
orthopedic braces, wheelchairs, heart pacemakers, and dialysis machines (including the
dialyzer). Corrective medical appliances such as hearing aids, eyeglasses and contact
lenses qualify for exemption. Moreover, generally, home glucose monitors, test strips
and related supplies used to treat human diabetes also qualify for the 1% State rate of
tax. See subsection (d) of 86 Ill. Adm. Code 130.311.
I hope this information is helpful. If you require additional information, please
visit our website at https://tax.illinois.gov/ or contact the Department’s Taxpayer
Information Division at 800-732-8866.
Very truly yours,
Richard S. Wolters
Associate Attorney
RSW:slc