Citing the unfairness of taxing women on everyday feminine products, the state of Louisiana will no longer impose a state sales tax of 4.45% on diapers, tampons, and feminine products, effective July 2022. Louisiana legislators joined hands to collectively vote to lead to the bill being signed into law by Governor John Bel Edwards. The bill applies exemption to adult and children's diapers. This includes temporary and washable feminine products such as tampons, menstrual cups, menstrual pads, sanitary napkins, and panty liners. This marks a monumental event for women and families since it spares them from paying the state's rather high sales tax (ranging up to 11.45% inclusive of local tax) on necessities. The state will be foregoing $11 million on annual sales tax revenue as feminine products will receive the same tax treatment as prescription medicine.
How the Sales Tax Exemption on Diapers and Tampons Affects the Numbers
On a national scale, women in America spend almost $150 million on feminine hygiene products. In Louisiana, women and families spend $249 million yearly on tampons and diapers. With the tax break, here's how much Louisiana households save:
- On average, a woman will spend $7- $10 on an 18-pack of tampons every month. In general, the total sales tax in New Orleans is 9.45%, which combines the state (4.45%), city (2.5%), and parish tax (2.5%) rates. When the tax break comes into effect, only the parish tax will apply, meaning sales tax will cost $0.25 from $0.69.
- Further, households will set aside extra dollars given the recent surge in diaper prices. In Louisiana, a family spends roughly $1,500 on diapers annually; applying the same rates, sales tax costs will be reduced from $104.25 to $37.50.
The Tax Exemption and Women
Aside from the budget savings that will be much appreciated by struggling families, the tax cut addresses the easily overlooked tax inequality imposed on women compared to their male counterparts. Women spend 7% more on identical products than men, which further constrains their purchasing power over their lifetime. The tax break signifies that now women won't have to make the tough decision of choosing between food and necessities.
The sales tax exemption also puts into question how manufacturers and retailers will price products that target women. In addition, when states have had to eliminate taxes, they increase taxes on other products and services.
Staying Compliant With the Louisiana Pink Tax Exemption
Businesses that sell feminine products and diapers must collect and remit sales tax correctly regardless of where they are based. Those in New Orleans need to keep in mind that the city has already effected a pink tax exemption of 2.5% in respect of local sales taxes in 2020 with the Orleans Parish School Board (1.5%) and Regional Transit Authority (RTA) (1%) rates remaining unchanged. However, when the exemption takes effect, all the jurisdictions will uniformly not charge the state sales tax of 4.45%.
Our sales tax experts will assist you with everything to do with Louisiana sales taxes, including simplifying your sales tax compliance in lieu of the pink tax exemption this year. Get in touch with us today.