As of April 1, 2000, do retailers need to collect Texas sales tax on vitamins, minerals, and nutritional/herbal dietary supplements (including ones marketed for weight loss)?

Plain-English summary

Right after a new exemption took effect, a taxpayer asked the Comptroller to confirm by letter (following a phone call) how the over-the-counter drugs and medicines exemption applies to vitamins, minerals, and nutritional supplements — specifically herbal dietary supplements marketed for weight loss.

The Comptroller confirmed: effective April 1, 2000, sales of vitamins, minerals, and nutritional supplements for humans (including herbal dietary food supplements for weight loss and similar purposes) are exempt from Texas sales and use tax. Retailers — including direct sales organizations — no longer need to collect sales tax on these items, and they don't need to check whether a product carries an NDC (National Drug Code) number; the exemption applies regardless of NDC status.

Two things stay outside the exemption:

• Creams and lotions are not exempt as over-the-counter drugs/medicines unless they're medicated (the letter's example: an antiseptic for cuts).
• Products for animals (the letter's example: flea shampoo) are not covered by this over-the-counter drug and medicine exemption at all.

What this means for you

Retailers and direct sales organizations selling supplements

Stop collecting sales tax on vitamins, minerals, and nutritional/herbal supplements for humans sold on or after April 1, 2000 — including weight-loss supplements — and don't worry about whether the product has an NDC number; it's exempt either way.

Sellers of creams, lotions, or pet-care products

Don't assume this exemption covers you. Non-medicated creams and lotions stay taxable, and anything marketed for animal use (like flea shampoo) is excluded from the over-the-counter drug/medicine exemption entirely, regardless of its ingredients.

Accountants and tax professionals

This letter confirms the practical scope of the April 1, 2000 OTC drugs/nutritional supplements exemption at the moment it took effect: broad coverage for human vitamins/minerals/supplements with no NDC-number gatekeeping, but explicit exclusions for non-medicated topical creams/lotions and animal products.

Common questions

Q: Do I need to collect sales tax on vitamins and nutritional supplements I sell?
A: No, as of April 1, 2000, sales of vitamins, minerals, and nutritional supplements for humans are exempt from Texas sales and use tax.

Q: Does the supplement need an NDC number to qualify for the exemption?
A: No. Retailers don't need to concern themselves with whether the product has an NDC number — these items are exempt regardless.

Q: Are creams and lotions exempt under this same rule?
A: Only if medicated (like an antiseptic for cuts). Non-medicated creams and lotions remain taxable.

Q: What about supplements or products for pets?
A: Products for animals, such as flea shampoo, are not covered by the over-the-counter drug and medicine exemption.

Q: Can I rely on this letter for my own business?
A: No. This opinion is based on the facts submitted; other facts, though similar, may yield different results.

Citations and references

No Texas Tax Code section or administrative rule is cited by number in the original letter (it references "the enclosed bulletin," which is not part of the published text).

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200004217L

Original ruling text

April 19, 2000

Fax: **

Dear **:

Thank you for your phone call and letter concerning the exemption of
over-the-counter drugs and medicines effective April 1, 2000.

Effective April 1, 2000, sales of vitamins, minerals, and nutritional
supplements (including herbal dietary food supplements for weight loss, etc.)
are exempt from Texas sales or use tax. Retailers (including direct sales
organizations) are no longer required to collect sales tax on vitamins,
minerals, and nutritional supplements for humans. As explained in the enclosed
bulletin, retailers do not need to concern themselves whether the vitamins,
minerals, or nutritional supplements have an NDC number. These items are
exempt regardless.

Creams and lotions are not exempt as over-the-counter drugs and medicines
unless medicated (e.g., antiseptic for cuts). Products for animals (e.g., flea
shampoo) are not covered by the over-the-counter drug and medicine exemption.

This opinion is based on the facts you submitted. Other facts, though similar,
may yield different results.

You may call me toll free at 1-800-531-5441, ext. 5-0030. The direct line is
512/475-0030. You may also write to Tax Policy, Comptroller of Public
Accounts.

Sincerely,

David Somerville
Tax Policy Division