AVMA Report: State Taxes on Veterinary Sales and Services


SUMMARY REPORT: State taxes charged on veterinary sales and services
In 2003, veterinary medical associations in over 40 states and Puerto Rico responded to our request for information on taxes charged for veterinary sales and services. Some states responded with yes/no answers while others sent comprehensive tax law packets. The regulations and exemptions on sales tax, also called retail tax, vary greatly from state to state and, in some cases, even within a state. Because of the complex rules regarding these taxes, this report provides only a general overview of sales and service taxes as they affect veterinary practices.
Most states did not send separate information on service animals or food animals vs. companion animals; therefore, this report deals mainly with taxes levied on products and services for companion animals.
Note that this information has been updated as tax laws were enacted since the survey, or more information became available.
Additionally, this report has been supplemented with information gathered by the Federation of Tax Administrators in January 2017 and further information can be obtained at the following website: https://www.taxadmin.org/current-tax-rates.
Eight states reported that there were no taxes of any kind charged on animal products or services.
Use tax
Nearly all states reported one form or another of a use tax charged to veterinarians. Common taxable items would be drugs, medications, syringes, and miscellaneous medical supplies (consumables) used by veterinarians in rendering professional services. The supplier collects taxes on these items at the time of purchase. Rules vary among the states as to whether any of the taxes can be passed along to consumers.
Prescription drugs and vaccines
In all but one state, prescription drugs, vaccines, and medicated products are tax-exempt to both the veterinarian and the client when administered in a clinic or by a veterinarian while providing a medical service. Most states allow drugs and health care items to be sold tax-exempt if dispensed by a veterinarian during a consultation and noted on the client record. (Refills likewise charted would also be tax-exempt.)
Non-prescription and OTC drugs or products
Over 30 states reported that non-prescription products purchased through a veterinary clinic are considered retail purchases and sales tax must be charged and remitted to the state.
Taxes on veterinary services
Currently, only three states, Hawaii, New Mexico and South Dakota, collect tax on veterinary medical services, including routine exams and vaccinations. In July 2018, Kentucky will begin to collect tax on the gross receipts of small animal veterinary services. Nine states collect taxes on ancillary services such as grooming or boarding. In Iowa, grooming services are taxed, while boarding is not.