When a medical kit bundles taxable items (like gloves or scissors) with exempt items (like wound dressings), is the whole kit taxable or exempt?

Plain-English summary

A medical supply company asked the Comptroller to confirm the taxability of dozens of individual items it sells to health care customers, plus how bundled kits containing a mix of taxable and exempt items should be taxed overall.

For individual items, the response is a long taxable/exempt list — for example: adhesive tape remover, disposable scalpels, patient gowns, and specimen collection containers are taxable; arm slings, hydrogel wound gel and gauze, mattresses for beds, side bed rails, wheelchair supplies, and wound packing strips are exempt. The taxpayer, as supplier, can buy these items tax-free from its own vendor using a resale certificate, then must collect tax from its health care customers on the taxable items per the list.

For kits or packages combining taxable and exempt items (the letter walks through five example kits: an irrigation tray, catheter insert tray, debridement kit, wound dressing change tray, and trach care kit), the Comptroller applies a predominant-cost test: the taxability of the entire kit is determined by comparing the cost of the taxable components against the cost of the exempt components. If the taxable items cost more, the whole kit is taxed as a unit; if the exempt items cost more, the whole kit is exempt as a unit — the kit isn't split item-by-item at the point of sale, even though the letter breaks down each kit's contents by individual taxable/exempt status to help the seller calculate which side wins.

What this means for you

Medical, dental, and first-aid supply companies

When you sell prepackaged kits mixing taxable supplies (gloves, scissors, forceps, plastic waste bags) with exempt supplies (gauze, wound dressings, iodine swabsticks), calculate the total cost of the taxable components versus the exempt components in each kit — whichever side costs more determines whether you charge tax on the entire kit price, not on a per-item basis.

Health care providers and hospitals purchasing kits

Don't expect a kit invoice to break out tax item-by-item; the supplier should be charging tax (or not) on the kit as a whole, based on which side of the taxable/exempt cost comparison predominates.

Accountants and tax professionals

This letter is a useful, itemized reference list for common medical/dental/first-aid supply taxability determinations, plus a clean statement of the predominant-cost bundling rule as applied to five concrete real-world kit compositions.

Common questions

Q: If a medical kit has both taxable and exempt items, is it taxed item-by-item?
A: No — the whole kit is taxed as a unit based on which costs more: if the taxable items' cost exceeds the exempt items' cost, the entire kit is taxable; if the exempt items cost more, the entire kit is exempt.

Q: Are gloves and gauze both taxable or exempt?
A: Different — in this letter, latex gloves are taxable while various gauze products (4x4 gauze sponge, cotton-filled gauze, gauze trach dressing) are listed as exempt, illustrating why the predominant-cost comparison matters for kits combining both.

Q: Can a medical supply company buy items tax-free to resell?
A: Yes — as the supplier, the company may issue a resale certificate to its own vendor in lieu of tax, then collect tax from its health care customers on the taxable items (or taxable kits) per the taxability determination.

Q: Can any medical supply company rely on this specific item list?
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), and individual item classifications can be fact-specific. Confirm current treatment of your own product list with a tax professional.

Citations and references

No statutes or rule numbers were cited by number in this letter; the response applies the Comptroller's general medical-supply exemption categories and the predominant-cost bundling rule to the specific item list and kit compositions presented.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200102062L

Original ruling text

February 15, 2001

Fax **

Dear **:

This is in response to your recent letter concerning the taxability of certain
medical supply items. The items on your list are restated below followed by my
response. As the supplier of the items below, you may issue your vendor a
resale certificate in lieu of tax. You should collect tax from your health
care customers as indicated below.

Abduction wedge Response: Please provide details concerning use.
Adhesive tape remover Response: Taxable.
Arm sling Response: Exempt.
Bye-Bye Odor spray Response: Taxable.
Carafe w/handle & lid 32OZ Response: Taxable.
Decuibitis measuring device Response: Taxable.
Dry wipes, disposable Response: Taxable.
Goggles, clear w/visor Response: Taxable.
Hand roll "skweez" Response: Taxable.
Hydrogel impregnated gauze Response: Exempt.
Hydrogel wound gel 1oz Response: Exempt.
Lap Hugger Response: Taxable.
Mattress for bed Response: Exempt.
OB Pads Response: Taxable.
Patient gowns Response: Taxable.
Patient towel drapes Response: Taxable.
Positioning pillow Response: Taxable.
Quilted underpads Response: Taxable.
Scalpel, disposable Response: Taxable.
Side bed rails Response: Exempt.
Specimen collection container Response: Taxable.
Tegaderrn wound dressing Response: Exempt.
Wet wipes, disposable Response: Taxable.
Wheelchair supplies Response: Exempt.
Wound packing strip plain Response: Exempt.
Wound packing strip w/iodoform Response: Exempt.
Gait belt - used to contro1 the ambulatory patient Response: Taxable.
Glen sleeve - used for compression on arm or leg Response: Exempt.
TED Hose - anti embolism stocking Response: Exempt.
Syringe, luerlock - used for medication injections Response: Exempt.

Note - When a kit or package of medical items is sold, the predominant cost of
the entire kit will determine the taxability of the kit. If the cost of the
taxable items is greater than the cost of the exempt items, the kit is taxable.
If the cost of the exempt items is greater, the kit will be exempt. The
taxability of each item in the kit is indicated below.

Irrigation tray
1200cc outer tray Response: Taxable.
500cc graduated container Response: Taxable.
60cc piston irrigation Response: Taxable.
tip protector Response: Taxable.
alcohol prep pad Response: Exempt.
underpad Response: Taxable.

Catheter Insert tray
povidone iodine swabsticks Response: Exempt.
30cc Syringe (prefilled w/sterile water) Response: Exempt.
latex gloves Response: Taxable.
lubricating jelly Response: Taxable.
underpad Response: Taxable.
fenistrated drape Response: Taxable.

Debridement Kit
latex gloves Response: Taxable.
fenistrated drape Response: Taxable.
4x4 Gauze sponge Response: Exempt.

15 disposable scalpel Response: Taxable.

tussue forceps Response: Taxable.
scissors Response: Taxable.
tip protector Response: Taxable.

Wound dressing change tray
transfer forceps Response: Taxable.
suture scissors Response: Taxable.
suture forceps Response: Taxable.
Abd pad 8x7.5 Response: Taxable.
4x4 Cotton filled gauze Response: Exempt.
povidone iodine swabsticks Response: Exempt.
tape, roll Response: Exempt.
plastic waste bag Response: Taxable.
safety pin Response: Taxable.
hospital wrap Response: Taxable.

Trach Care Kit
3 compartment tray Response: Taxable.
latex gloves Response: Taxable.
trach tube brush Response: Taxable.
waterproof drape Response: Taxable.
4x4 Gauze sponge Response: Taxable.
pipe cleaner Response: Taxable.
6" Cotton tip applicator Response: Taxable.
gauze trach dressing Response: Exempt.
twill tape Response: Taxable.

The State Tax Automated Research (STAR) system, which provides viewing and
downloading of our rules, the Tax code, edited letter rulings, hearings,
Attorney General Opinions, etc., may be accessed on the Internet at

This opinion is based on the facts presented. Other facts, though similar, may
provide a different result. I hope this information answers your questions.

If you have any questions or need more information, I'll be glad to help you.
You may call me toll-free at 1-800-531-5441, extension 5-0330. The direct line
is 512/475-0330. You may also write to Tax Policy Division, Comptroller of
Public Accounts.

Sincerely,

Bettie Peterson
Tax Policy Division