Is Pedialyte subject to NY sales tax?

Plain-English summary

The petitioner asked whether Pedialyte -- a product children use when ill to replenish fluids and electrolytes lost to vomiting and diarrhea -- is taxable. Per the manufacturer (Abbott), Pedialyte is specially formulated with a precise balance of sugars and electrolytes (recommended by the American Academy of Pediatrics) to replace lost fluids; sports drinks, sodas, and juices don't meet the medical guidelines. It's used under medical supervision and isn't nutritionally complete.

The Office of Counsel concluded Pedialyte is exempt. Tax Law 1115(a)(3) exempts drugs and medicines and products consumed by humans for the preservation of health. The regulation (20 NYCRR 528.4(a)(3)) reads that category to include substances not ordinarily considered drugs or medicines -- its Example 1 lists analgesics, antiseptics, antacids, cough/cold remedies, laxatives, aspirin, and cod liver oil. Pedialyte isn't claimed to cure vomiting or diarrhea, but it is specifically formulated, marketed, and sold for use by ill children to alleviate the effects of fluid loss from vomiting and diarrhea -- not as a general nutritional beverage. As a product used in the preservation of health of an ill child, it is exempt under 1115(a)(3).

What this means for you

Pharmacies, grocers, and retailers

Pedialyte rides the health-product exemption in 1115(a)(3) -- don't charge sales tax on it. The reasoning turns on its formulation and marketing for an ill child's recovery (replacing fluids/electrolytes), placing it alongside other exempt non-drug health items like antacids and laxatives. Contrast products marketed as general nutrition or sports hydration (sodas, sports drinks), which remain taxable.

Shoppers

You shouldn't be charged sales tax on Pedialyte in New York.

Common questions

Q: Pedialyte doesn't cure anything -- why is it exempt?
A: The exemption covers products consumed for the preservation of health, not just cures; Pedialyte qualifies because it's formulated and sold to help an ill child recover from fluid loss.

Q: Are sports drinks exempt the same way?
A: No -- those are marketed as general hydration/nutrition and remain taxable; Pedialyte's exemption rests on its specific use for ill children.

Citations and references

• Tax Law section 1115(a)(3) (exemption for drugs, medicines, and products consumed for preservation of health)
• 20 NYCRR section 528.4(a)(3) (products consumed for preservation of health)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2010.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a10_5s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-10(5)S
Sales Tax
February 16, 2010

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S091117A

Petitioner address redacted requested an advisory opinion as to whether Pedialyte®, a product
used by children when ill to replenish fluids and minerals (electrolytes) that are lost due to vomiting and
diarrhea, is subject to sales tax.
We conclude that receipts from sales of Pedialyte® are exempt from sales tax.
Facts
Abbott Laboratories, the company that distributes Pedialyte® products, states on its Web site that
the product is used: “To quickly replace fluids and electrolytes lost during diarrhea and vomiting and to
help prevent dehydration in infants and children, for maintenance of water and electrolytes following
corrective parenteral therapy for diarrhea. Pedialyte® is designed to promote fluid absorption more
effectively than common household beverages.”
Abbott Laboratories’ Web site, in promoting the use of Pedialyte®, explains that it is specially
formulated to quickly replace lost fluids and electrolytes due to diarrhea and vomiting so a child can
rehydrate quickly and feel better fast. The Web site notes “that sports drinks, sweetened sodas, and juices
don’t meet medical guidelines for helping prevent dehydration due to diarrhea and vomiting in kids”
claiming that those “drinks are too high in carbohydrates (sugar) and too low in sodium - an important
electrolyte that is lost during diarrhea and vomiting.” In contrast, the Web site states that: “Pedialyte is
designed with … precise combination of sugars and electrolytes to promote quick fluid and electrolyte
absorption” and that it “. . . contains the quantity and ratio of sugars (dextrose and fructose) and minerals
(electrolytes) recommended by the American Academy of Pediatrics. This precise balance of sugar and
electrolytes makes Pedialyte effective in the management and treatment of diarrhea with or without
vomiting.”
Abbott’s “Abbott Nutrition” Web site also cautions that the Pedialyte® should not be diluted and
that it should be used under medical supervision.
It is also noted on the Abbott Laboratories’ Web site that: “Pedialyte® is not nutritionally
complete and is therefore not recommended as the sole source of nutrition for more than a few days
without the recommendation of a physician.”
Analysis
Section 1115(a)(3) of the Tax Law provides an exemption from the sales and use tax for drugs
and medicines used internally or externally in the cure, mitigation, treatment or prevention of illness and
disease in human beings; supplies required for such use or to correct or alleviate physical incapacity; and
products consumed by humans for the preservation of health.

-2­

TSB-A-10(5)S
Sales Tax
February 16, 2010

Section 528.4(a)(3) of the Sales and Use Tax Regulations in discussing that exemption in
pertinent part provides:
Products consumed by humans for the preservation of health include other substances
used internally or externally, which are not ordinarily considered drugs or medicines.
Example 1: Analgesics, antiseptics, antacids, cough and cold remedies, laxatives, aspirin,
boric acid ointment, cod liver oil and castor oil are exempt.
Pedialyte® is not represented to be a drug, or medicine that may cure a child’s vomiting and
diarrhea. However, it is specifically formulated for use with children who have lost fluids due to
vomiting or diarrhea. Pedialyte® is marketed and sold for use under a physician’s supervision for a child
who is ill and vomiting or suffering diarrhea due to illness. It is not marketed or sold as being
nutritionally beneficial or useful other than in alleviating the effects the loss of fluids and nutrients due to
vomiting and diarrhea have on an ill child.
Pedialyte® is clearly for use as indicated for sick children. As such, it is a product used and
consumed in the preservation of health of an ill child and, thus, is exempt from sales tax under section
1115(a)(3) of the Tax Law.

DATED: February 16, 2010

NOTE:

/S/
Jonathan Pessen
Director of Advisory Opinions
Office of Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to
the facts set forth therein and is binding on the Department only with respect to
the person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued
or for the specific time period at issue in the Opinion.