Indiana and New York exempt diapers

Children’s diapers will be exempt from Indiana sales and use tax starting September 1, 2022. New York will expand its exemption for diapers later in the year.

The new sales tax exemption in Indiana is due to the enactment of Senate Bill 2, which defines “children’s diapers” as “disposable or reusable diapers marketed to be worn by children.” The exemption does not extend to diapers designed for adults.

There’s been an ongoing effort in the Hoosier State to exempt all products used to manage incontinence (i.e., adult and children’s diapers) as well as feminine hygiene products. But the most recent such measures, House Bill 1273 (2021) and Senate Bill 169 (2022), died.

The more narrow exemption for children’s diapers provided under SB 2 was enacted during the General Assembly’s 2022 Special Session alongside Senate Bill 1, which placed new restrictions on abortion. Both bills were signed into law on August 5, 2022.

Diapers for children and adults are already exempt from state sales and use tax in New York, and from local sales and use tax in some parts of the state. However, the existing exemption is provided under New York’s exemption for certain clothing, which doesn’t require local jurisdictions to exempt qualifying products from local sales tax, and most localities don’t. The New York State Department of Taxation and Finance keeps a list of jurisdictions that do and don’t offer the local exemption.

Under the new Diaper Initiative Affordability for Parents and Elderly Remedy (DIAPER) Act, diapers are exempt from all New York sales and use taxes — state and local. The act takes effect on the first day of the sales tax quarterly period commencing at least 90 days after the bill becomes law, but the tax department hasn’t yet released a definitive date. 

Several other states have recently adopted a new sales tax exemption for diapers: Louisiana and Maryland started exempting diapers on July 1, 2022, and Colorado and Iowa will provide a sales and use tax exemption for diapers and menstrual products beginning January 1, 2023.

However, proposed exemptions in other states, including Maine and Michigan, failed to make it to law. If and when new exemptions are adopted, Avalara Tax Desk will let you know.