Is a yoga and meditation studio's instruction, classes, memberships, and retreats subject to Texas sales tax as taxable amusement services?

Plain-English summary

A yoga and meditation studio sells classes, ten-class packages, monthly memberships, private sessions, workshops, teacher trainings, and retreats. Studio space is only accessible during a scheduled, instructor-led session — customers can't just show up and use the space on their own like an open gym. Membership packages bundle a set number of classes, guest passes, and discounts without itemizing individual pieces. The studio also sells snacks, apparel, gear, and rents mats, and (currently through a third party, soon on its own) runs multi-day retreats that include lodging, food, and yoga/meditation sessions. The studio asked how all of this should be taxed.

Texas ruled the instruction itself is not taxable. Texas taxes "amusement services," but its own rules carve out activities that are "primarily instructional in nature," including sport and yoga instruction specifically — this applies to group classes, private sessions, workshops, teacher trainings, and the yoga/meditation portion of retreats alike. The dividing line from a taxable "open gym" membership is access: because customers can't use the studio space without an instructor present and a scheduled session, this isn't the kind of open facility-access membership that IS taxable (unlike a health club that lets members work out on their own).

But several related charges are taxable: pre-packaged snack foods, athletic apparel and gear, and separately-priced mat rentals are all ordinary taxable tangible personal property sales. Class materials are taxable only if separately priced — materials folded into a class's lump-sum price aren't separately taxable to the customer (though the studio itself owes tax on its cost to acquire them). At retreats, itemized charges for prepared food are taxable, and a lodging "reimbursement" charge is nontaxable only if it's the exact cost of the room (any markup on the room price becomes a taxable markup, and the studio also then owes hotel occupancy tax on that markup).

What this means for you

Yoga studios, fitness instructors, and similar instructional businesses

Structuring access so customers can only use your space during a scheduled, instructor-led class (not as an open facility membership) is what keeps your core service in the nontaxable instructional category rather than taxable "amusement service" territory. Complimentary towels, equipment, and other incidentals bundled into instruction pricing are treated as part of the (nontaxable) instruction sale, though you still owe use tax on your own cost to provide them.

Retreat and workshop organizers

Passing through lodging costs at your exact cost (including any hotel occupancy tax you paid) keeps that charge out of both sales tax and hotel occupancy tax — but marking up the room price triggers tax on the markup under both regimes. Keep prepared food, gear, and entertainment charges separately itemized from instruction charges.

Accountants and tax professionals

This ruling walks through several distinct product lines under one roof (instruction, retail goods, food, lodging pass-through, and mixed-content retreats) using the same core distinction — instructional vs. open-access amusement — that recurs across the Comptroller's fitness/wellness guidance (STAR 9801164L, 200103848L, Comptroller's Decision No. 104,707). Useful as a comprehensive template for multi-revenue-stream wellness businesses.

Common questions

Q: Would the studio's instruction become taxable if it allowed open, unsupervised studio access?
A: Yes — the ruling specifically distinguishes this taxpayer's scheduled, instructor-required access from a taxable "open gym" membership. Allowing customers to use the space without an instructor present would likely shift the analysis toward the taxable amusement-service category.

Q: Are complimentary items like towels and equipment taxable to the customer?
A: No — they're treated as incidental to the (nontaxable) instruction sale. However, the studio itself owes sales/use tax on its own cost to acquire these items, since it can't buy them tax-free for resale.

Q: How does the lodging reimbursement at a retreat avoid hotel occupancy tax?
A: Only by charging customers the exact amount the studio paid for the room (including any hotel occupancy tax already paid by the studio). Any markup requires the studio to collect and remit hotel occupancy tax on that markup portion.

Q: Does this ruling apply to my studio, gym, or retreat business?
A: Not automatically. This is a private letter ruling binding only on the Comptroller as to this taxpayer's specific facts. A different access model (e.g., unsupervised open studio hours) could change the outcome.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.051, § 151.010 (sales tax imposition; taxable item)
• Tex. Tax Code § 151.0028; § 151.0101(a)(1) (Amusement Services)
• 34 Tex. Admin. Code § 3.298(a)(1), (a)(2), (a)(2)(B), (a)(5) (Amusement Services — instructional exclusion; open-access membership taxable)
• 34 Tex. Admin. Code § 3.293(a)(8), (c), (c)(9) (prepared food; snack food)
• 34 Tex. Admin. Code § 3.294(c)(1) (mat rental)
• Tex. Tax Code § 151.009 (Tangible Personal Property); § 151.007 (Sales Price)
• 34 Tex. Admin. Code § 3.285(b), (b)(4) (Resale Certificate; Sales for Resale)
• STAR Accession No. 9605L1413A12 (May 28, 1996) (yoga instruction nontaxable)
• STAR Accession Nos. 9801164L (Jan. 7, 1998), 200103848L (Mar. 23, 2001); Comptroller's Decision No. 104,707 (2011) (open gym taxable; private/group training nontaxable)
• STAR Accession No. 201902013L (Feb. 22, 2019) (lump-sum class materials)
• STAR Accession No. 200910594L (Oct. 29, 2009) (exact-cost lodging reimbursement)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/202002030L

Original ruling text

February 28, 2020

RE: Private Letter Ruling No. 20190305111518

Dear **:

We issue this private letter ruling in accordance with Rule 3.1, Private Letter Rulings and General Information Letters. [ENDNOTE 1] We are responding to your request dated Feb. 24, 2019, and additional information received on April 23, June 3, July 16, and Oct. 10, 2019.

Detrimental reliance relief is provided in accordance with Rule 3.10, Taxpayer Bill of Rights. You requested guidance on the taxability of yoga and meditation memberships, classes and retreats.

Facts Presented

** (Taxpayer) offers several pricing structures for yoga and meditation classes which include complimentary towel service, bathroom and shower access, an optional yoga posture assist, and limited equipment (e.g., blocks and straps). Some pricing structures include packages with discounts on merchandise and yoga workshops.

Yoga studios are only available to members during scheduled class times or during scheduled private lessons. Customers are not permitted to use studios without an instructor present.

Taxpayer’s various pricing structures for yoga instruction include charges for a single class, a ten-class package, a single month’s membership, monthly recurring memberships, and private sessions. Taxpayer also charges for yoga workshops and associated classes, yoga teacher trainings, and retreats.

Membership packages are not itemized. Each pricing structure for membership packages varies in the number of classes within each package, number of guest passes, and discounts on additional workshops and retail items. A trained instructor leads the yoga or meditation classes, workshops and associated classes, private sessions, and retreats.

Taxpayer currently sells retreats that are provided by a third party although they intend to begin organizing their own retreats. Taxpayer’s itemized receipts for retreats will show costs for lodging, food and drinks, yoga, meditation, and other costs associated with the retreat. Regarding lodging, Taxpayer will charge its customers a reimbursement for the room costs, including hotel occupancy tax, which will be paid by the Taxpayer.

Taxpayer also rents mats and sells apparel, gear, drinks, and small pre-packaged snacks. Taxpayer states they collect sales and use tax on these items.

Questions, Rulings, and Analysis

Our restatement of your questions is shown below, followed by our responses and analysis.

Question One: Are Taxpayer’s yoga, meditation classes and yoga instruction subject to sales and use tax as amusement services?

Ruling One: No. Taxpayer’s yoga, meditation classes and yoga instruction are considered non-amusement services and are not taxable.

Analysis for Ruling One: Texas imposes a tax on each sale of a taxable item in this state. Section 151.051 (Sales Tax Imposed). The term “taxable item” includes tangible personal property and taxable services. Section 151.010 (Taxable Item). Among the services on which tax is imposed is the provision of an amusement service. Section 151.0101(a)(1) (“Taxable Services”).

Amusement services are defined to include the provision of amusement, entertainment, or recreation. Section 151.0028 (“Amusement Services”). Rule 3.298 (Amusement Services) defines and provides examples of non-amusement services that are not subject to sales tax. Non-amusement services include activities that are primarily instructional in nature and instruction in a sport or musical discipline. Rule 3.298(a)(2).

Yoga instruction to students or teachers are nontaxable amusement services under Rule 3.298(a)(2)(B). See also STAR Accession No. 9605L1413A12 (May 28, 1996).

The Comptroller previously addressed the taxability of personal or group training services and “open gym” memberships. STAR Accession Nos. 9801164L (Jan. 7, 1998) and 200103848L (March 23, 2001) and Comptroller’s Decision No. 104,707 (2011). Private yoga sessions provided for a separately stated charge, flat fee, or under a contract are not taxable as an amusement service if the service involves personal one-on-one training and the client goes through a program that is not just instructions on equipment use. Group yoga sessions are not taxable if the training has a class format similar to a pilates class.

The Comptroller has also clarified that a membership or admission fee that allows for open use of the gym is subject to sales tax under Rule 3.298(a)(1). STAR Accession Nos. 9801164L (Jan. 7, 1998) and 200103848L (March 23, 2001) and Comptroller’s Decision No. 104,707 (2011). Taxpayer services do not constitute admission to an open gym because Taxpayer’s customers cannot access the studio space without attending a scheduled personal or group yoga session.

Taxpayer’s complimentary items and services are incidental to Taxpayer’s provision of yoga instruction and are not taxable. The transaction is the sale of yoga instruction.

Taxpayer owes sales and use tax on all items (e.g., towels, equipment) it provides with its yoga instruction. These items may not be purchased tax free for resale. Rule 3.285(b)(4) (Resale Certificate; Sales for Resale).

Question Two: Are snack items, athletic apparel, gear, rental of mats and class materials subject to sales tax?

Ruling Two: Pre-packaged snack food items, athletic apparel, gear, rental of mats and class materials are taxable.

Analysis for Ruling Two: Taxable items also include snack food items and tangible personal property. Taxpayer’s sales of pre-packaged snack-food items are taxable. Rule 3.293(c)(9) (Food; Food Products; Meals; Food Service). Sales of athletic apparel, gear and separately stated charges for rental of mats are also taxable. Section 151.009 (“Tangible Personal Property”) and Rule 3.294(c)(1) (Rental and Lease of Tangible Personal Property).

Class materials sold to the customer for separately stated charges are taxable. However, class materials transferred to the customer under the lump-sum price of the class are not taxable to the customer. Taxpayer owes sales and use tax on all materials provided under a lump-sum contract during a class. STAR Accession No. 201902013L (Feb. 22, 2019).

Question Three: Are itemized charges for items sold at a retreat, including charges for yoga or meditation classes, food and drinks, and reimbursement of lodging, subject to sales tax?

Ruling Three: Charges for yoga or meditation instruction are not taxable. A reimbursement charge for the exact cost of a room for lodging for the purpose of participating in a nontaxable yoga retreat is not taxable. Charges for prepared food are subject to sales tax. Charges for entertainment that are taxable amusement services are taxable.

Analysis for Ruling Three: As provided in Ruling One, charges for yoga or meditation instruction are not taxable.

The sales price of a taxable item means the total amount for which the taxable item is sold without deductions for other expenses. See Section 151.007 (“Sales Price” or “Receipts”). Taxpayer’s itemized reimbursement charge for the exact amount of a room for the purpose of lodging in order to attend the yoga retreat is not subject to sales tax because the yoga retreat itself is not taxable.

The Taxpayer is also not responsible for collecting and remitting hotel occupancy taxes on the reimbursement charge, so long as the taxpayer does not mark up the cost of the rooms sold to their customers. The reimbursement charge must be the exact amount, including applicable hotel occupancy taxes, the taxpayer paid for the room. Any mark up on the room charge will require the taxpayer to collect and remit hotel occupancy tax on the markup charge of the room. See STAR Accession No. 200910594L (Oct. 29, 2009).

Sales of food sold for immediate consumption are taxable. Rule 3.293(a)(8) and (c). Itemized charges for prepared food and drink sold during the retreat are taxable. Tax must be collected from Taxpayer’s customers for those items. Taxpayer may issue a resale certificate to the restaurant or prepared food provider in lieu of paying tax for the items. Rule 3.285(b).

Itemized charges for entertainment that constitutes a taxable amusement service are subject to sales tax. Rule 3.298(a)(1) and (a)(5). Tax must be collected from Taxpayer’s customers for those items. Again, Taxpayer may issue a resale certificate to the provider of the amusement service to purchase the service tax-free for resale.

Comptroller’s Decisions and STAR documents cited can be found on the Comptroller’s State Tax Automated Research (STAR) system. The Texas Tax Code, Texas Administrative Code, and the STAR system are accessible at www.comptroller.texas.gov/taxes/.

If you have questions about this private letter ruling, please email us through our website at https://comptroller.texas.gov/web-forms/tax-help/ and reference Private Letter Ruling No. 20190305111518.

Sincerely,

Tax Policy Division – Indirect Taxes

Texas Comptroller of Public Accounts

ENDNOTE:

1. Unless otherwise indicated, all references to “Section” are to the Texas Tax Code, and all references to “Rule” are to Title 34 of the Texas Administrative Code.