From the Office of State Senator Rodney Ellis

For Immediate Release
March 31, 2000
Contact: Jeremy Warren, (512) 463-0113

Texas Gears Up for Tax-Free Medicine
Ellis legislation ending sales taxes on most over-the-counter medicines goes into effect April 1

HOUSTON// -- Beginning April 1, Texans will be able to buy over-the-counter medicines, vitamins and health aids tax-free, Senator Rodney Ellis (D-Houston) announced today. The over the-counter sales tax, part of Senator Ellis' SB 441, will save Texans an estimated $160 million a year.

"I know it is April Fool's Day, but this is no joke," said Senator Ellis. "Beginning April 1, Texans will be able to buy over-the-counter medicines tax-free. Eliminating this tax is the best medicine for Texas families."

SB 441, passed last year by the Texas Legislature, provides $506 million in consumer and business tax relief for Texas families and business. The legislation creates a three-day sales tax holiday each August on shoes and clothing under $100, eliminates the sales tax on most Internet access fees, and provides new incentives for research and development, job creation and child care for Texas businesses. According to the Texas Comptroller, Texans saved $32.6 million during the first sales tax holiday last year.

At 8.25 percent, Texas has one of the highest combined sales tax rates in the United States. According to the Citizens for Tax Justice, Texas has the third most regressive tax system in the nation. High sales taxes hit low income and elderly Texans the hardest, forcing our poorest citizens to pay up to six times more of their income in sales taxes than more affluent Texans. Cutting sales taxes is the fairest way to ensure tax relief benefits those who need it most.

Sales taxes on over-the-counter medicines are a double burden for many hard-working Texans. Those hit hardest by sales taxes are less likely to have health insurance. Rather than get prescription medicines -- which are exempt from sales taxes -- these Texans must rely on over-the counter medicines to keep their families healthy.

"Despite our growing economy, too many hard-working Texas families struggle to make ends meet," said Ellis. "Eliminating the sales tax on over-the-counter medicines is a healthy start to tax relief and will help those Texans who need it most."

To be tax exempt, a product must be a drug or medicine: an article or substance intended for use in the diagnosis, cure, mitigation. treatment or prevention of disease or suffering. The drug or medicine must have a National Drug Code (NDC) number issued pursuant to U.S. Food and Drug Administration regulations.

The sales tax exemption does not apply to medical equipment, appliances and devices such as thermometers, heating pads, toothbrushes and dental floss. However, the legislature voted specifically to apply the new sales tax exemption to blood glucose monitoring strips. Previous law exempts orthopedic braces, such as neck and back braces, crutches, wheelchairs, hearing aids and their batteries, hypodermic needles and syringes from the sales tax.

More information about the sales tax exemption on over-the-counter medicines is available on the Texas Comptroller's website at or by calling 1-800-252-5555.


April 1, 2000

Legislation passed by Senator Ellis eliminates the sales tax on over-the counter medicines and vitamins beginning April 1, 2000. That will save Texans $8 on every $100 they spend on needed family health items.

Approximately 100,000 products manufactured by about 800 companies qualify for the sales tax exemption. The following are examples of product categories that will be exempt from the sales tax. The list does not include all tax exempt drugs and medicines, but is a handy guideline for consumers and businesses.

Allergy treatments
Anti-diarrhea medicines
Anti-nausea products
Anti-microbial products
Anti-rheumatic products
Anti-vomiting products
Blood fortifiers (hematinics)
Bronchodilator and anti-asthmatic products
Cold remedies
Cough suppressants
Dandruff products
Eye care products
Eye care and contact lens products
Hemorrhoid products
Sedatives and sleep aids
Sunburn prevention products
Sunburn treatment products
Wound care dressings and supplies