Publication 36, Veterinarians
Taxability of Purchases

Tax generally applies to your purchases of items you will consume in your practice. However, if you use a resale certificate to purchase merchandise you will resell, tax will not apply to the transaction. If you purchase property for resale but use it for another purpose, you may be required to pay use tax to us. This section describes common situations in which sales or use tax may apply to your purchases. Also refer to Required registration to report use tax—How to register and file a return.

General principles and methods

Generally, you should use a resale certificate to purchase items you will sell at retail and pay sales tax reimbursement to your suppliers or use tax on purchases of items you will consume. However, it may be difficult for you to apply this to all of your purchases, since you may both resell and consume certain products you buy for your practice.

You may find it helpful to adopt one of the following purchasing methods and use it consistently in your practice.

If you rarely make retail sales

If you rarely make retail sales, you may prefer not to use a resale certificate when making purchases for your practice. If you do resell items, you may be able to take a “tax-paid purchases resold prior to use” deduction (see Tax-paid purchases resold prior to use).

If you ordinarily make retail sales of each item you purchase

If you sell some of each product you purchase, you may wish to buy all of those products using a resale certificate. You will report sales tax on items you sell at retail, and use tax on the cost of items you consume in your practice. You should report that cost under Purchases Subject to Use Tax on your sales and use tax return (see Items you consume when tax is not paid on a purchase). Use tax is explained in more detail below.

If you can determine which products you will sell and which you will consume

If you can readily determine which products you buy to sell at retail, and which products you buy to consume, you should use a resale certificate when purchasing items you will resell. You should pay tax reimbursement to your suppliers when purchasing products you will consume.

Use tax

In certain circumstances, use tax applies to the purchase price of items you buy. For example, if you purchase an item without paying an amount for California tax and then use the item for a purpose other than resale, your purchase is subject to use tax. The use tax rate is the same as the sales tax rate for your location. You should report purchases subject to use tax on the line of that same name (usually line 2) of your sales and use tax return.

The following sections describe typical situations in which use tax applies to your purchases.

Merchandise purchased for resale

You must report use tax to us if you purchase merchandise with a resale certificate and then use the merchandise for other business or personal purposes. Taxable uses include:

• Use of products as a consumer (see Are you a retailer, consumer, or both?).
• Donations (donations to certain charitable organizations may be tax-exempt). Please call our Customer Service Center at 1-800-400-7115 (TTY:711) for further information.
• Gifts to friends, employees, and others.
• Personal use.

Please note: If you know at the time you make a purchase that you will not resell the merchandise you are buying, you may not use a resale certificate for that transaction.

Items used for demonstration and display

Merchandise you use exclusively for demonstration and display while it is for sale is not subject to use tax. Sales tax applies when the item is sold.

If you use a demonstration or display item for any additional purpose, including personal use, the purchase price must be reported under Purchases Subject to Use Tax on your return. Again, sales tax applies to the subsequent retail sale of the merchandise. For more information, see Regulation 1669, Demonstration, Display and Use of Property Held for Resale—General. Please refer to the Additional Information page for information and the complete list of regulations and publications referenced in this publication.

Purchases from out-of-state retailers

In general, if you purchase taxable merchandise from a retailer located outside the state without paying California tax, and use the merchandise for a purpose other than for resale (including use as a consumer), the purchase is subject to use tax and must be reported to us.

Credit against use tax liability for payment of another state’s tax. If you were required to pay, and did pay, another state’s sales tax on a purchase, you may take a credit against your use tax liability by:

• Reporting the amount of the purchase under Purchases Subject to Use Tax, and
• Deducting the amount of tax paid under Sales or Use Tax Paid to Other States on your return. You can claim a credit up to the amount of California use tax due.

Please note: You may not claim this credit against your sales tax liability for purchases you resell.

Some out-of-state retailers are authorized to collect and pay California use tax. If your receipt indicates that the retailer collect the correct amount of California use tax from you. You do not need to report the purchase on your return.

Items you consume when tax is not paid on a purchase

If you purchase merchandise without payment of California tax and consume the items in your practice rather than resell them, you must report use tax on your purchase. This applies whether you buy the product using a resale certificate or from an out-of-state supplier who does not collect California use tax (see Purchases from out-of-state retailers, above).

Partial exemption for agriculture-related purchases

Purchases of certain supplies, equipment and machinery, liquefied petroleum gas (LPG), feed, and veterinary drugs by veterinarians used primarily or exclusively in assisting farmers, ranchers, or other growers may be exempt from the state general fund portion of the sales and use tax, currently 5.25 percent. To receive the partial exemption, veterinarians must provide a partial exemption certificate to retailers. For more information, see Regulation 1533, Liquefied Petroleum Gas, Regulation 1533.1, Farm Equipment and Machinery, and publication 66, Agricultural Industry.

Please note: The rate for the general fund portion of the sales tax has been lower in the past and may change again after the date of this publication. You must use the rate in effect at the time your sale occurs.

Business supplies and equipment

Purchases of items used in your business, such as display fixtures, equipment, instruments, bookkeeping materials, and maintenance materials, are subject to sales or use tax. Tax also applies to your purchases of supplies used in your practice, such as disinfectant, dressings, suture materials, and similar items. If bought from an out-of-state seller who does not charge California use tax, you must report the purchase on your return, under Purchases Subject to Use Tax. The subsequent retail sale of these items would be subject to sales tax.

Purchases of feed for food animals

Purchases of feed for food animals are not subject to tax (see Sales of feed). This holds true whether you later sell the feed at retail or consume it in your practice. You should provide your supplier with a completed feed exemption certificate at the time of purchase (see Exemption certificates).

Purchases of drugs and medicines

As with sales of drugs and medicines, some of your drug and medicine purchases may not be subject to tax. For information regarding how tax applies to transactions involving drugs and medicines, see the text and table on Tax-exempt sales of drugs and medicines. You should provide your supplier with a drug exemption certificate when you make qualifying nontaxable purchases of drugs and medicines.

Revision July 2026