A bill that passed the Texas House of Representatives on a 145-2 vote in March 2023 will remove sales tax from certain family care items in the State of Texas. 

The proposal, put forward by Rep. Donna Howard, D-Austin, aimed to eliminate the sales tax imposed on a range of essential items. These include diapers, baby wipes, and baby bottles, as well as menstrual products like tampons, sanitary pads, and menstrual cups. Additionally, the proposal encompasses maternity clothing and items designed for the purpose of pumping breast milk. An amendment later followed from Rep. Bryan Slaton, R-Royse City, adding adult diapers to the exemption. 

In June 2023, Senate Bill 379 was signed into law establishing a sales & use tax exemption for the following family care items:

• Baby bottles
• Baby wipes
• Breast milk pumping products
• Diapers (adult and children)
• Feminine hygiene products (menstrual cups, pads, and sponges; sanitary napkins, tampons, and similar products “sold for the principal purpose of feminine hygiene in connection with the menstrual cycle or postpartum care”)
• Maternity clothing
• Wound care dressings (e.g., sterile adhesive bandages, rolls or pads of gauze, and surgical and medical tape used to secure a wound care dressing to a patient)

For businesses operating within Texas, it’s imperative to closely monitor and adhere to all relevant sales tax regulations. This includes staying updated on changes such as the elimination of taxes on items like tampons, diapers, and similar products.

Failing to appropriately apply taxes to taxable items can result in significant retroactive tax obligations for a business, coupled with associated penalties and interest charges. Furthermore, neglecting to provide mandated exemptions could lead to substantial financial penalties and dissatisfied customers.

Additionally, it’s crucial to acknowledge that even if a business is located outside of Texas, there might be an obligation to collect and remit Texas sales tax. Remote sellers are required to register for sales tax and adhere to all relevant sales tax criteria if their sales of tangible personal property and services in the state exceed $500,000 within the preceding 12 months. After registration, remote sellers must ensure they do not collect sales tax on items that are exempt, including but not limited to diapers, tampons, and various other products.

This exemption will take effect from September 1, 2023.

For more information on other tax policy changes this month click here.