COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:2361H.02C Bill No.:HCS for HB 1107 Subject:Taxation and Revenue - Sales and Use; Taxation and Revenue - General;
Department of Revenue; Food
Type:Original Date:April 23, 2025Bill Summary:This proposal modifies the definition of food to authorize a reduced sales tax
on the purchase of dietary and nutritional supplements.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2026FY 2027FY 2028
General Revenue
Could exceed
($20,674,761)*
Could exceed
($27,566,348)
Could exceed
($27,566,348)
Total Estimated Net
Effect on General
Revenue
Could exceed
($20,674,761)*
Could exceed
($27,566,348)
Could exceed
($27,566,348)
* Oversight notes the fiscal impact for FY 2026 is lesser because FY 2026 is a partial year (9
months).
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Total Estimated Net
Effect on Other State
Funds $0$0$0
Numbers within parentheses: () indicate costs or losses. L.R. No. 2361H.02C
Bill No. HCS for HB 1107
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2026FY 2027FY 2028Total Estimated Net
Effect on FTE 000
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Local Government$0$0$0 L.R. No. 2361H.02C
Bill No. HCS for HB 1107
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FISCAL ANALYSIS
ASSUMPTION
Section 144.014 - Sales and Use Tax Imposed on Certain Products
Officials from the Office of Administration - Budget and Planning (B&P) note starting
August 28, 2025, the sales tax rate on dietary and nutritional supplements will be reduced to the
rate levied on food. B&P notes that food is taxed at a state rate of 1.225%, as it is exempt from
the 3% general revenue tax.
Based on published market research, the U.S. market for dietary supplements was $53.58 billion
in 2023. Assuming Missouri consumption is similar to the rest of the U.S., B&P estimates that
Missouri accounts for approximately 1.7% of the total U.S. market.
Using the above information, B&P estimates that Missouri taxable sales of dietary supplements
could be $918,878,256 annually. Therefore, exempting these products from the 3% GR tax could
reduce TSR and GR by $27,566,348 annually.
Officials from the Department of Revenue (DOR) note This proposal starting September 1,
2025, would modify the definition of food to include dietary and nutritional supplements. It
should be noted that the current definition of food is one that matches the federal Supplemental
Nutrition Assistance Program (SNAP) definition of food. Modifying the definition of food could
potentially lose us Missouri its SNAP program. DOR defers to DSS for that fiscal impact.
The definition of food in this section, determines the amount of state sales and use tax collected.
Currently all items that are subject to the state sales and use tax are assessed a 4.225% tax.
However, under Section 144.016, food is only assessed a 1.225% tax rate. The 3% collected for
general revenue is not collected on food. The definition of food that assesses the lower tax rate
are those items the Supplemental Nutrition Assistance program identifies as food.
This proposal includes a definition of “dietary and nutritional supplements” as ones identified by
21 U.S.C. Section 321(ff). DOR notes that vitamins, dietary and nutritional supplements that
contain a nutrition label are taxed at the food sales tax rate of 1.225% instead of the 4.225% state
sales tax rate already. DOR is unable at this time to determine which dietary, and nutritional
supplements contain the nutrition label and are assessed at the lower vs higher rate, or which
ones would qualify under the U.S.C. Section 321 (ff). For fiscal note purposes only, DOR will
assume all currently pay the 4.225% rate and therefore, any impact could potentially be lower
than estimated.
DOR assumes for this fiscal note that dietary and nutritional supplements would include all
vitamins and minerals sold in Missouri. Using market data, DOR notes that $53,580,000,000
vitamins and minerals were sold in the U.S. in 2023. Assuming Missouri’s share of the total
market is 1.8% DOR can estimate that $1,024,534,800 of these products are sold in Missouri. L.R. No. 2361H.02C
Bill No. HCS for HB 1107
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Removing the 3% sales tax that is directed to general revenue would result in a loss of
$30,736,044 annually.
DOR is unable to determine if additional products would qualify as nutritional supplements
under this proposal. DOR notes this proposal could be significantly underestimated.
This proposal would become effective August 28, 2025, and given that sales tax is remitted one
month behind collection DOR can expect only a 9-month impact in FY 2026.
Fiscal
Year
General Revenue
Loss
2026($23,052,033)2027($30,736,044)2028+($30,736,044)
This proposal will require DOR to modify its forms ($2,200), website and computer
programming ($10,000).
Oversight notes the DOR requests one-time cost for website income-tax changes and updates to
comply with the proposed language; however, Oversight notes that DOR receives appropriation
for routine website updates and will not show those costs in the fiscal note.
Officials from the Department of Social Services assume the proposal will have no fiscal
impact on their organization. Oversight does not have any information to the contrary.
Therefore, Oversight will reflect a zero impact in the fiscal note for this agency.
Oversight notes according to the Supplemental Nutrition Assistance Program, if an item has a
Supplement Facts label, it is considered a supplement and is not eligible for SNAP purchase,
therefore it is subject to the full state sales tax rate.
Oversight notes this provision adds dietary and nutritional supplements to the items subject to
the reduced state sales tax rate. The proposal defines dietary supplements as defined under 21
U.S.C. Section 321(ff):
The term "dietary supplement"-
(1) means a product (other than tobacco) intended to supplement the diet that bears or
contains one or more of the following dietary ingredients:
(A) a vitamin;
(B) a mineral;
(C) an herb or other botanical;
(D) an amino acid;
(E) a dietary substance for use by man to supplement the diet by increasing the
total dietary intake; or L.R. No. 2361H.02C
Bill No. HCS for HB 1107
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(F) a concentrate, metabolite, constituent, extract, or combination of any
ingredient described in clause (A), (B), (C), (D), or (E);
Oversight notes officials from B&P and DOR have conducted independent research and both
assume this provision will have a direct fiscal impact on state revenues. Oversight does not have
any information to the contrary. Therefore, Oversight will reflect BAP’s estimated fiscal impact
in the fiscal note.
Oversight notes this would start August 28, 2025, and sales tax is remitted one month behind
collection, therefore Oversight assumes this proposal would result in 9 months collected in FY
2026.
FISCAL IMPACT – State GovernmentFY 2026
(9 Mo.)
FY 2027FY 2028GENERAL REVENUERevenue Reduction - §144.014 -
Reduction of sales tax for dietary and
nutritional supplements
Could exceed
($20,674,761)
Could exceed
($27,566,348)
Could exceed
($27,566,348)
ESTIMATED NET EFFECT ON
GENERAL REVENUE
Could exceed
($20,674,761)
Could exceed
($27,566,348)
Could exceed
($27,566,348)
FISCAL IMPACT – Local GovernmentFY 2026
(9 Mo.)
FY 2027FY 2028$0$0$0
FISCAL IMPACT – Small Business
Certain small businesses that sell dietary and nutritional supplements could be impacted by this
proposal.
FISCAL DESCRIPTION
Currently, a tax is levied on the retail sale of food at a rate of 1%. This bill changes the definition
of food for this purpose to also include all dietary and nutritional supplements.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space. L.R. No. 2361H.02C
Bill No. HCS for HB 1107
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SOURCES OF INFORMATION
Office of Administration - Budget and Planning
Department of Revenue
Department of Social Services
Julie MorffJessica HarrisDirectorAssistant DirectorApril 23, 2025April 23, 2025