Is an infant incubator exempt from Texas sales tax, and what about a transport device, surgical gloves, or a motility measurement system sold to hospitals?

Plain-English summary

A medical equipment manufacturer asked the Comptroller's tax.help service about the taxability of four products it sells to hospitals and doctors: an infant transport incubator (used mainly in flight), a similar transport device for older children (a stretcher-based unit instead of a warming top), radiation-resistant surgical gloves, and Motility Measurement Systems.

Infant incubator: exempt. The Comptroller's reasoning is specific and grounded in medical definition — citing Stedman's Medical Dictionary, an incubator is "an apparatus for maintaining an infant (usually premature or hypoxic) in an environment of proper oxygenation, humidity, and temperature," effectively continuing a womb-like environment and assisting hypoxic infants with breathing. That function qualifies it as a prosthetic device under Comptroller Rule 3.284 (Drugs, Medicines, Medical Equipment and Devices), which is exempt from sales tax. The letter notes incubators were previously exempted on a different theory (as specialized hospital beds), but the current basis is the prosthetic-device classification.

Transport device for older children: not automatically exempt. Unlike the infant incubator, this device is only exempt if purchased by an individual under a written or oral prescription from a licensed practitioner of the healing arts (a doctor). If a hospital or doctor buys it to provide services to patients generally (rather than a specific prescribed purchase by/for an individual patient), Texas sales tax is due — unless the hospital itself independently qualifies as a tax-exempt entity, in which case it can issue its own exemption certificate.

Radiation-resistant surgical gloves and Motility Measurement Systems: both taxable, subject to the same possible prescription-based individual-purchase exemption or exempt-hospital-entity exemption discussed for the transport device.

What this means for you

Medical device manufacturers selling to hospitals

Don't assume all your medical equipment gets the same tax treatment just because it's medical in nature. An infant incubator's specific womb-replicating, breathing-assistance function qualifies it as an exempt prosthetic device under Rule 3.284, while superficially similar equipment (a transport device for older children) needs a doctor's prescription and individual-purchase structure to qualify — and general-purpose items like surgical gloves and motility measurement systems are taxable by default.

Hospitals and doctors purchasing this equipment

If you're buying equipment (other than an infant incubator) to provide general patient services rather than filling an individual prescription, expect to pay sales tax unless your hospital independently qualifies as a Texas tax-exempt entity and issues its own exemption certificate.

Accountants and tax professionals

This letter is a useful item-by-item reference distinguishing the prosthetic-device exemption (function-based, applies broadly like the incubator) from the prescription-based individual-purchase exemption (requires a doctor's prescription and an individual purchaser, not a hospital buying in bulk for general use) under Rule 3.284.

Common questions

Q: Are infant incubators exempt from Texas sales tax?
A: Yes — they qualify as prosthetic devices under Comptroller Rule 3.284 because they maintain the oxygenation, humidity, and temperature environment an infant (often premature or hypoxic) needs, similar to the womb, and assist with breathing.

Q: Is a similar transport device for older children also exempt?
A: Only if purchased by an individual under a doctor's written or oral prescription — a hospital or doctor buying it to provide general services still owes tax unless the hospital independently qualifies as a tax-exempt entity.

Q: Are surgical gloves or motility measurement systems exempt?
A: No, both are subject to Texas sales tax, subject to the same possible prescription/exempt-entity exceptions discussed for the transport device.

Q: Can a hospital ever buy this equipment tax-free?
A: Yes, if the hospital itself is a tax-exempt entity — it can issue an exemption certificate in lieu of paying Texas sales tax.

Q: Can any medical device company rely on this letter for its own products?
A: Not directly. This is a Texas STAR letter ruling binding on the Comptroller only for the taxpayer it addresses (34 Tex. Admin. Code Rules 3.1, 3.10). Confirm your own product's function and purchase structure with a tax professional.

Citations and references

Statutes and rules:

• Comptroller Rule 3.284 (drugs, medicines, medical equipment and devices)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200012953L

Original ruling text

December 28, 2000

From: Philip Knisely
To:
Subject: Medical devices and equipment

Dear **:

Thanks for using tax.help email to inquire about medical equipment and Texas
sales tax.

Sales tax is not due on the purchase of an infant incubator because the
incubator qualifies as a prosthetic device for sales tax purposes. In the past,
infant incubators were exempted from sales tax as specialized hospital beds.
However, Stedman's Medical Dictionary defines an incubator as an apparatus for
maintaining an infant (usually premature or hypoxic) in an environment of
proper oxygenation, humidity, and temperature. In effect, the incubator
continues an environment (similar to the mother's womb) necessary for continued
incubation. Furthermore, the incubator assists hypoxic infants with breathing.
Because the infant incubator qualifies as a prosthetic device as defined in
attached Comptroller's Rule 3.284 (Drugs, Medicines, Medical Equipment and
Devices), it is exempt from sales tax.

The transport device for older children is not exempt from Texas sales tax
unless it is purchased by an individual under the written or oral prescription
of a licensed practitioner of the healing arts (doctor). If it is purchased by
a hospital or doctor to provide services, Texas sales tax is due (unless the
hospital is an exempt entity- they may issue an exemption certificate in lieu
of paying Texas sales tax).

The radiation resistant surgical gloves are subject to Texas sales tax (see
answer on transport device regarding possible exemptions).

Motility Measurement Systems are subject to Texas sales tax (see answer on
transport device regarding possible exemptions).

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

Please let me know if you have additional questions.

Sincerely,
Philip Knisely

Dear Sir or Madam,

Please advise as to the taxability of our medical equipment which we
manufacture and sell to hospitals and doctors.

Our products include:

An infant incubator used for transport - mainly in flight;
A transport device used for older children mainly in flight (instead of a
warming unit on top of the medical components it contains a stretcher);
Radiation resistant surgical gloves; and
Motility Measurement Systems.

Thank you for your time and consideration.