Publication 61, Sales and Use Taxes: Tax Expenditures Fiscal Year 2023–24
Tax Expenditures: Necessities of Life
Tax Expenditures Related to Property Necessary to the Sustenance of Life
Food
Animal Life, Feed, Seeds, Plants and Fertilizer, Drugs and Medicines
The sale and use of animal life or feed for animal life, seeds, and plants, the products of which normally constitute food for human consumption, are exempt from tax. The sale and use of fertilizer to be applied to land, the products of which are to be used for human consumption, are also exempt. In addition, the sale and use of drugs and medicines including oxygen that are administered to food animals, the primary purpose of which is the prevention or control of disease, are exempt from tax. This is an expansion of the general food exemption.
Medicated Feed and Drinking Water
The sale and use of drugs or medicines administered to animal life as an additive to feed or drinking water, the primary purpose of which is the prevention and control of disease of food animals, or of nonfood animals which are to be sold in the regular course of business, are exempt from tax.
Food Products
Sales of food for human consumption are generally exempt from tax unless sold in a heated condition (except hot bakery items or hot beverages, such as coffee, sold for a separate price), served as meals, consumed at or on the seller’s facilities, ordinarily sold for consumption on or near the seller’s parking facility, or sold for consumption where there is an admission charge.
Candy, Confectionary, Snack Foods, and Bottled Water
The exemption for sales of food products includes candy and confectionery, snack foods, and bottled water.
Food Products Sold Through Vending Machines
The vending machine operator is the consumer of (1) food products sold at retail for 15 cents ($0.15) or less and (2) food products, including candy and confectionery sold through a bulk vending machine for 25 cents ($0.25) or less. Sixty-seven percent (67%) of gross receipts from the sales of cold food products, hot coffee, hot tea, and hot chocolate through vending machines at a price greater than 15 cents ($0.15) are also exempt from tax.
CalFresh Benefits Purchases
When otherwise taxable purchases are made with CalFresh benefits, only the amounts paid with CalFresh benefits are exempt from tax. Amounts paid with forms of consideration other than CalFresh benefits, such as cash or manufacturer’s coupons, remain taxable. Examples of otherwise taxable sales which are exempt from tax when purchased with CalFresh benefits, include sales of carbonated beverages, food coloring, and ice.
Health-Related
Professional Health Services
A licensed chiropractor, optometrist, physician, surgeon, podiatrist, licensed hearing aid dispenser, or registered dispensing optician is generally the consumer and not the retailer of property furnished in the performance of professional services. Also, producers of X-ray films or photographs are the consumers of property used to produce the films or photographs for use in diagnosing the medical or dental conditions of a human being. In addition, licensed pharmacists dispensing certain replacement contact lenses are regarded as consumers, rather than retailers, with respect to those lenses.
Meals Furnished by Institutions
Sales of meals and food products served to residents and patients of a health facility, a community care facility, a residential care facility for the elderly, any housing that is financed by state or federal programs and that primarily serves older people, any house or institution supplying board and room for a flat rate to people 62 years and older, an alcoholism recovery facility, and a drug abuse recovery or treatment facility are exempt from tax.
Blood Storage Units
The sale and use of any container used to collect or store human blood, plasma, blood products, or blood derivatives, including any disposable tubing, filters, grommets, and needles sold along with the bags and held in a blood bank for medical purposes are exempt from tax. This exemption includes, but is not limited to, blood collection units and blood pack units.
Prescription Medicines
Sales of medicines are exempt from sales and use taxes if (1) prescribed for treatment of human beings and dispensed by a registered pharmacist; (2) furnished by or sold to a licensed physician and surgeon, podiatrist, or dentist for patient treatment; (3) furnished by a health facility for patient treatment according to the order of a licensed physician; (4) sold to this state or any political subdivision or municipal corporation for use in treating human beings; (5) dispensed by prescription for the treatment of human beings and furnished without charge by a pharmaceutical manufacturer or distributor to a doctor, a health facility for the treatment of human beings, or to an institution of higher education for instruction or research; (6) furnished by a medical facility or clinic operated by this state or any political subdivision or municipal corporation; or (7) sold to outpatient clinics, as defined under Health and Safety Code according to the order of a licensed physician and surgeon, dentist, and podiatrist. In addition to substances commonly recognized as medicines, the following items are specifically included in the definition of “medicine” for sales and use tax purposes:
- Sutures.
- Bone screws and pins, pacemakers, and other articles (excluding dentures) permanently implanted or which dissolve in the body.
- Orthotic devices, including custom-made biomechanical foot orthoses, defined in Regulation 1591(b)(4).
- Mammary prostheses, and any appliances and related supplies necessary as a result of surgery by which an artificial opening was made to eliminate natural waste.
- Prosthetic devices other than auditory, ophthalmic and ocular devices, and other than dental prostheses.
- Artificial limbs and eyes.
- Programmable drug infusion devices worn on or implanted in the body.
- Insulin syringes.
- Any product fully implanted or injected in the human body, or any drug or any biologic, when such are approved by the U.S. Food and Drug Administration to diagnose, cure, mitigate, treat, or prevent any disease, illness, or medical condition.
- Hemodialysis products.
Dispensed on prescription includes furnishing insulin and insulin syringes and furnishing appliances and supplies necessary to eliminate natural waste if such items are furnished according to a physician’s written order. Dispensed on prescription also includes furnishing certain orthotic and prosthetic devices and replacement parts according to a written order of a physician or podiatrist.
Wheelchairs, Crutches, Canes, and Walkers
Sales to and purchases by people of wheelchairs, crutches, canes, quad canes, white canes for the legally blind, and walkers under the direction of a physician, are exempt from tax.
Vehicle Modifications for Handicapped People
The sale of property used to modify vehicles for physically handicapped people is exempt from tax. When a previously modified vehicle is resold, the sale of the portion of the vehicle which has been modified is exempt if the vehicle is sold to a disabled person who qualifies for a distinguishing license plate or placard. Beginning July 1, 2020, and before July 1, 2030, “physically handicapped persons” includes eligible people with a severe burn injury, as defined in Section 3901(1) of Title 38 of the United States Code.
Oxygen Delivery Systems
Sales of medical oxygen delivery systems are exempt from tax when sold or leased to an individual as directed by a physician.
Medicinal Cannabis and Medicinal Cannabis Products
The sale and use of medicinal cannabis or medicinal cannabis products are exempt from sales and use tax when a qualified patient or primary caregiver for a qualified patient provides their medical marijuana identification card issued under Health and Safety Code section 11362.71 and a valid government-issued identification card.
Medical Identification Tags
Sales of medical identification tags are exempt from tax when furnished by a qualifying organization.
Medical Health Information
The use of medical health information literature purchased by a qualifying charitable organization, which is engaged in the dissemination of such information, is exempt from use tax when the literature is purchased from either the national office or a branch of the national office of the same organization.
Health and Safety Materials
The use of health and safety educational materials and insignia routinely sold in connection with health and safety and first aid classes are exempt from use tax if the materials are: (1) purchased or sold by a qualifying nonprofit national organization which disseminates such information, and (2) purchased from a national office or a branch or chapter of such national office of the same organization.
Housing
Rentals of Household Furnishings
The rental of household furnishings is not subject to tax when rented with living quarters. Tax must be paid on the cost of such items unless purchased in an exempt occasional sale.
Telephone Lines and Poles
Telephone and telegraph lines, electrical transmission and distribution lines, and the poles, towers, or conduit by which they are supported or in which they are contained are excluded by statute from the definition of tangible personal property when sold in place.
Gas, Electricity, Water, and Steam
The sale of gas, electricity, and water, including steam and geothermal steam, brines, and heat are exempt from taxation if delivered through mains, lines, or pipes. Further, water sold to an individual in bulk quantities of 50 gallons or more for household use is exempt from taxation if the residence is not serviced by mains, lines, or pipes. Also, sales and purchases of liquid petroleum gas (LPG) are exempt from tax when delivered into a tank of 30 gallons or more to either a qualified residence for household use, or a qualified person to be used in producing and harvesting agricultural products.
Revision December 2025