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Drugs

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Drugs for human use are exempt from sales tax. This includes prescribed drugs and over-the-counter drugs that meet the definition below.  

Note: Vitamins and minerals are not over-the-counter drugs. They are taxable dietary supplements. See Dietary Supplements.  

Drug Definition

Drug means a compound, substance, or preparation, and any component of a compound, substance, or preparation that is:

  • Recognized in the official United States Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States, or official National Formulary, and supplement to any of them
  • Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease or intended to affect the structure or function of the body

Drugs do not include food and food ingredients, dietary supplements, taxable cannabis products, or alcoholic beverages.

Over-the-Counter Drug Definition

To determine if an over-the-counter drug is taxable or exempt, review the label. An over-the-counter-drug is exempt from sales tax when the label includes one of the following:

Examples of items you need to review the label to determine if it’s taxable or exempt include:  

  • Acne medications
  • Analgesics (aspirin, acetaminophen, ibuprofen, ketoprofen, naproxen)
  • Antacids
  • Antibiotic creams and ointments
  • Antifungal creams and sprays
  • Antihistamines
  • Antiseptics (betadyne, iodine)
  • Burn remedies
  • Cold and cough medicines, drops, lozenges
  • Contact lens solutions
  • Contraceptives (creams, gels, foams, medicated condoms)
  • Decongestants
  • Dermal fillers
  • Diaper rash creams
  • Enema preparations
  • Eye drops
  • Hand sanitizers
  • Hydrogen peroxide
  • Laxatives
  • Medicated lip balm
  • Medicated rubs
  • Nutrition formulas (enteral, parenteral)
  • Rubbing alcohol
  • Petroleum jelly
  • Sleeping pills
  • Smoking cessation (gum, lozenges, patches)
  • Yeast infection medications

Note: Over-the-counter-drugs do not include grooming and hygiene products even if they otherwise meet the definition. See Grooming and Hygiene Products.  

Edible Cannabinoid Products

Edible cannabinoid products are taxable. See Cannabis Tax.  

Bundled Transactions

A bundled transaction is when a retailer sells a combination package consisting of at least two separate items sold together for one price.  

When a bundled transaction includes drugs, durable medical equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic devices, or medical supplies, special rules apply that determine if the sale is taxable.  

The sale is taxable if either:

  • The seller’s purchase price of the taxable items in the transaction is more than 50% of the total purchase price of all of the items in the transaction
  • The seller’s sales price of the taxable items in the transaction is more than 50% of the total sales price of the transaction  

Note: Sellers cannot use a combination of the purchase price and sales price when making the 50% determination. 

Use tax is due on the seller’s cost of taxable items included in the bundle if both:

  • The retail sale of the bundled transaction is not taxable
  • The seller’s purchase price of all taxable items in the bundled transaction is more than $100

Example – Nontaxable Sale, No Use Tax Due

A medical stapler loaded with suture staples is sold for $10. The seller’s purchase price of the stapler is $2 and the staples are $6.  

The sale of the stapler is not taxable since the taxable item in the sale (stapler) is less than 50% of the total purchase price of all the items in the sale. The seller does not owe use tax on the taxable items because their purchase price is less than $100.


Example – Nontaxable Sale, Use Tax Due

Surgical kits containing a prosthetic device and disposable surgical instruments for implanting the prosthetic device are sold for $500. The seller’s purchase price of the nontaxable prosthetic device is $300, and the taxable surgical instruments is $150.

Sales of the surgical kits are not taxable because the seller’s purchase price of the taxable items (surgical instruments) is less than 50% of the total purchase price of all of the items in the sale. The seller owes use tax on their cost of the taxable items in the sale since they cost the seller more than $100.

Legal References and Resources

Minnesota Statutes  

Publications