Sales tax for health and beauty: A guide for vitamins, cosmetics, and medical devices
by January 22, 2026
While the health and beauty industry features specific tax nuances, like the fact that the specific ingredients can determine taxability, staying ahead of these rules ensures your brand remains compliant and set up for growth. By prioritizing accurate product classification and staying updated on local regulations, you can confidently determine taxability and focus on scaling your business with peace of mind.
This blog breaks down the key tax challenges for the health and beauty industry, offers practical steps to reduce risk, and shows how TaxJar helps health and beauty brands like quip, Plant Therapy, and Curology stay compliant while scaling.
Specific product ingredients matter for sales tax
States and localities don’t apply a single rule to health and beauty goods. Instead, taxability depends on how jurisdictions define products and the product taxability categories they use.
For example, some states base taxability on product composition like ingredients or active compounds. Taxability can also vary based on whether an item meets a state’s definition of medicine or medical device. What looks like cosmetics on the shelf could be exempt in one state and taxable in another.
With this in mind, we recommend businesses maintain a product master with ingredient lists, regulatory classifications, and sample labels to support tax decisions and audit documentation. Additionally, a sales and local sales tax consultant (SALT) might be beneficial for understanding the taxability nuances between states.
Claims and intended use can change taxability
On top of product ingredients, how you market and label a product matters for how it is taxed. For example, labels or marketing that imply a therapeutic or medical use—“treats acne”, “relieves pain”, or “clinically proven to reduce inflammation”—can move a product into different tax categories that offer exemptions for medical or therapeutic goods. Even directions for medical use or clinician recommendations included with a product can influence tax treatment.
It’s important for your tax and legal teams to coordinate with product marketing to ensure new copy and claims aren’t inadvertently altering taxability of an item.
Bundles and subscription models require precise handling
Kits, gift sets, and subscription boxes are common in the health and beauty industry (with the market size for global beauty subscription boxes projected to reach $2.99 billion by 2030), and come with their own set of compliance challenges. These types of offerings often mix taxable and exempt items, and how you tax those orders matters.
The safest approach is taxing at the line-item level—each SKU taxed according to its classification—so mixed orders are handled precisely, even as they are packaged together. For example, a skincare subscription box with a medicated acne treatment (potentially exempt) and a taxable cosmetic requires product-level tax handling to avoid over-collecting or under-collecting.
Subscriptions require businesses to determine taxability at each billing event. Things like promotions, trial periods and proration can change the taxable amount of the package. Subscription billing isn’t set-it-and-forget-it, but requires constant oversight to ensure the right tax amount is being charged for the package value.
Local rules and rates change often
State and local tax law changes often, and products like medical supplies, feminine hygiene, and over-the-counter medications are frequent targets for legislative change. For example, Nevada and Missouri have recently introduced states and local exemptions for incontinence and feminine hygiene products. Alabama recently passed legislation exempting feminine hygiene and breastfeeding equipment from sales tax.
Monitoring all the state and locality changes is time-consuming to manage manually. A tax solution like TaxJar monitors these types of changes and implements updates automatically, ensuring businesses are always collecting sales tax when necessary, and exempting it when required.
Practical checklist for health and beauty tax compliance
As you can see, the health and beauty industry is filled with compliance challenges. To help, we’ve outlined some steps to reduce risk and improve your compliance workflows.
- Build a product taxonomy
Tag SKUs with attributes such as cosmetic, medicated, dietary supplement, device, scented, and over-the-counter. Include ingredient lists, NDCs or regulatory IDs if applicable, and sample images for audit defense.
- Review marketing and labeling
Keep all versions of label art, product pages, and marketing collateral. Store these alongside SKU records to show intended use at the time of sale, and review with tax and legal teams to ensure taxability isn’t being changed by marketing messages.
- Configure checkout
Ensure your e-commerce platform sends product tax codes and attributes to your tax engine at checkout. For in-store sales, separate services and product line items to avoid misclassification.
- Automate taxability rules
Use a tax solution like TaxJar that automatically updates tax rules and applies correct taxability at the point of sale to avoid manual updates and human error.
How TaxJar helps health and beauty companies like Every Man Jack and Beautylish
Health and beauty companies face operational complexity and legal nuance—and that’s exactly where TaxJar adds value:
Automated, up‑to‑date taxability rules
TaxJar continuously tracks state and local exemptions and rule changes so the correct items are taxed—or exempted—at checkout, resulting in fewer manual updates, fewer tax-code errors, and less risk when jurisdictions change their rules.
Accurate reporting for exempt items
Transaction-level reporting supports simplified refund management, exemption certificates, and audit preparation. TaxJar provides the detailed records auditors expect—product tax codes, transaction histories, and stored exemption certificates—in one place.
Improved customer experience benefits
With TaxJar automatically applying sales tax in the background, your customers experience faster, more accurate checkouts. Correct tax is applied at the point of sale, improving pricing transparency and customer trust while reducing workload for your finance teams.
Product distinctions, marketing claims, mixed bundles, and shifting local rules create real sales tax risk for health and beauty brands. Misclassification can lead to refunds, penalties, and expensive audits. TaxJar simplifies the work: it applies current tax rules at checkout, centralizes records, and makes reporting and audits easier.
Ready to reduce tax risk and free your team to focus on product and growth? Meet with our sales team to see a TaxJar demo and understand how TaxJar helps health and beauty brands like Curology and quip handle sales tax accurately and at scale.
Frequently asked questions for the health and beauty industry
Many dietary supplements are taxable, while prescription medications are often exempt. It depends on the state and how the product is classified.
If labeling or intended use implies therapeutic treatment, some states may treat it as a medical product. Tax classification depends on state definitions and product claims.
We recommend taxing at the line-item level where possible. If your e-commerce platform requires a single tax rule, split line items can help.
TaxJar automates taxability rules, applies correct tax at checkout, automates registration and remittance, keeping you compliant as you grow. Get started with a free, 30-day trial today.
