Are over-the-counter hair regrowth products like Rogaine (minoxidil) exempt from Texas sales tax under the OTC drug and medicine exemption?

Plain-English summary

A retailer or consumer asked the Comptroller whether over-the-counter hair regrowth products (like Rogaine/minoxidil) qualify for Texas's newly effective OTC drug and medicine exemption. The Comptroller confirmed yes: effective April 1, 2000, sales of over-the-counter drugs and medicines are exempt from Texas sales tax, and a product qualifies as a drug or medicine if it's an article or substance intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease or suffering. A medicated product used to promote new hair growth fits that definition and is exempt.

Notably, the letter also corrects the Comptroller's own published guidance: a product does not need an NDC (National Drug Code) number to qualify for the exemption, even though Publication 94-155 stated otherwise at the time — the Comptroller acknowledged that statement was incorrect and said the publication was being updated.

What this means for you

Pharmacies and retailers selling OTC hair-growth products

Sell OTC hair regrowth products (minoxidil-based, etc.) tax-free under the OTC drug/medicine exemption — you don't need to verify an NDC number is on the product to apply the exemption, despite what older printed guidance may have said.

Consumers and businesses reviewing past invoices

If you were charged tax on an OTC hair-growth product on the theory that it lacked an NDC number, that basis for taxing it was specifically disclaimed by the Comptroller in this letter.

Accountants and tax professionals

This letter is a good example of the Comptroller correcting its own published guidance (Publication 94-155) in real time — worth flagging to clients that agency publications aren't infallible and a direct letter ruling can supersede a stated requirement. Confirm Publication 94-155's current text before relying on this correction, since it should have been updated since 2000.

Common questions

Q: Is Rogaine or other minoxidil-based hair regrowth product exempt from Texas sales tax?
A: Yes — as a medicated product used to promote new hair growth, it qualifies as an exempt over-the-counter drug or medicine under the exemption effective April 1, 2000.

Q: Does an OTC drug need an NDC number to be tax-exempt in Texas?
A: No. The Comptroller stated in this letter that no NDC number is required, correcting a since-outdated statement in Publication 94-155.

Q: What is the general test for whether a product qualifies as an exempt OTC drug or medicine?
A: Whether it's an article or substance intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease or suffering.

Citations and references

No specific statute or rule section was cited in the available text of this letter (it references Comptroller Publication 94-155, an informational publication rather than a statute or rule).

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200007515L

Original ruling text

Date: July 21, 2000

From: Irene Cage

To: **

Subject: OTC -hair regrowth

Dear **:

Thank you for your recent e-mail inquiry.

Effective April 1, 2000, sales of over-the-counter drugs and medicines are
exempt. To qualify for this exemption, a product must be a drug or medicine,
which is an article or substance intended for use in the diagnosis, cure,
mitigation, treatment, or prevention of disease or suffering.

A medicated product used to promote new hair growth is exempt under this new
exemption.

A product does not require an NDC number to qualify for exemption.

Publication 94-155 "Sales Tax Exemption for Over-the-Counter Drugs and
Medicines" is available at the following site:

Note: The statement in the above referenced publication regarding products
being required to have an NDC number is incorrect. We are in the process of
updating the publication.

"Over-the-Counter Drugs and Medicines - Frequently Asked Questions" is
available at the following site:

This opinion is based on the facts presented. Additional or different facts may
yield different results.

If you have any questions, please do not hesitate to call me toll free at
1-800-531-5441, extension 3-2995. The direct number is 512/463-2995.

Sincerely,

Irene Cage
Tax Policy Division