Should Your Baby’s Diapers Be Tax Free?

Whether you use disposables or cloth, the diapers you buy for your baby can add up to thousands of dollars. This fact has led family advocates and lawmakers to enact and propose tax breaks for those who buy diapers.

In Canada, some provinces exempt disposable and cloth diapers from provincial or harmonized sales tax. And many Quebec municipalities offer a subsidy for families who choose cloth diapers. 

In the United States, Maryland, Texas and Tennessee already have a tax-free holidays during the year when things like diapers are exempt from sales tax for a weekend or full week. Minnesota, New Jersey, New York and Pennsylvania are among the states that do not require retailers to charge sales tax on diapers. If you live in Wisconsin, there is a tax exemption for diaper cleaning services.

Should Your Baby’s Diapers Be Tax Free?

Currently, there are tax-free diaper proposals gaining steam in Illinois, Connecticut and California. They bring to mind some important questions:

What would be the savings? 

With sales tax exempted, a US family might save about 65 cents on a package of $7 generic disposables or 80 cents on a $10 reusable pocket diaper. Proponents of such legislation have estimated savings of $50 to $100 per year for a family.

What would be the cost?

Tax breaks mean millions of dollars in lost revenue for state and local governments – revenue that may be needed for roads, health care and education. It’s not a static system, so when a tax is lost in one place, it must be accounted for elsewhere – usually with a tax increase on something else or slashed funding. New tax laws mean retail systems will need re-programming and there will be more complexity when it comes to cataloging and reporting sales tax revenue.

Is it fair to single out diapers? 

Citizens struggle to pay for “necessities” like clothes, utilities and transportation every day. Would it be viewed as unfair if families with babies were given a tax break, but not other families? Or do you think most people would be happy to support the tax break even if it didn’t directly benefit them, since children are so important and the need for diapers is only temporary?

Should diapers be classified as medical goods? 

Diapers are generally classified as clothing (i.e. disposable or reusable underwear) or baby gear. Some proponents of tax-free diaper legislation argue that diapers are in the same category as incontinence products for children and adults, and should therefore be exempt from taxation. In the government’s view, using a product to treat diagnosed bladder malfunction is completely different from diapering a healthy baby who is simply too immature to grasp the potty routine (and even that’s debatable if you are trying Elimination Communication). Note: Children who are wearing diapers out of medical need do qualify for exemptions in the US, as do children who have a diagnosed condition that is being treated with cloth diapers. Written/verifiable documentation is required in these instances.) Even if diapers were classed as a medical cost it might not be enough to throw off the tax burden; the ibuprofen you take for a toothache or sprained ankle is still subject to sales tax.

Do tax-free diapers laws overlook more important issues?

A tax-free option might make a real difference for families that are literally pinching pennies. Their motto is “every little bit helps.” On the other hand, are there more effective ways to alleviate the cost of diapers without losing tax revenue? Other proposals that have been made: education and access to affordable cloth diapers (i.e. covers and flats/prefolds) through government programs (like WIC and other government programs, acceptance of cloth diapers at daycare and training for employees, free shipping and other incentives for diapers purchased online, greater awareness of cloth diaper charities and lending closets, etc.

Do you think there should be more exemptions and/or subsidies, or are there more effective ways to save families money without government intervention? 

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