Menstruation without Taxation: Impact of States Sales Tax Exemptions on Menstrual Product Prices and Consumer Behavior

• In Event: Tax Policy Design: Exemptions, Subsidies, and Revenue Effects

Abstract

Menstrual products are essential for health and hygiene, yet they have historically been subject to sales taxes in many U.S. states—a policy commonly referred to as the “tampon tax.” In response to concerns about affordability and equity, 29 states had eliminated these taxes by 2025. Despite widespread policy adoption, there is limited empirical evidence on whether such reforms meaningfully reduce prices or improve access, particularly for low-income households. This study examines the effects of state-level menstrual product sales tax exemptions implemented between 2016 and 2019 across five U.S. states. Using household-level purchase data from the NielsenIQ Consumer Panel, I analyze changes in retail prices and consumer purchasing behavior, including quantity, shopping frequency, product quality, and brand choice. To estimate causal effects, I employ a difference-in-differences framework with staggered treatment timing following Callaway and Sant’Anna (2021), complemented by synthetic control methods where necessary to address deviations from parallel trends. The analysis also incorporates an anticipation period to capture behavioral responses prior to policy implementation. The results show substantial pass-through of tax reductions to consumers. On average, final prices decline by approximately 8.1 percent following tax elimination, closely aligning with the magnitude of the tax cut. However, aggregate changes in purchasing quantities are modest and statistically insignificant, consistent with inelastic demand for menstrual products. Estimating per-percentage-point effects, each one-point reduction in the sales tax leads to a 0.89 percent decline in prices and a 0.28 percent, statistically insignificant increase in quantity. Heterogeneity analyses reveal important distributional effects. Low-income households are more price responsive, increasing purchase quantities and shopping frequency following tax reductions, suggesting improved affordability and reduced need for stockpiling. In contrast, middle- and high-income households exhibit anticipatory reductions in purchases and shift toward higher-priced, higher-quality products after implementation. These findings suggest that tampon tax exemptions effectively lower prices and improve access for financially constrained households, while also inducing quality upgrading among higher-income consumers. The results contribute to broader debates on tax incidence and equity, highlighting the importance of considering heterogeneous behavioral responses when evaluating targeted consumption tax policies.

Author

• Shuting He, University of Maryland, College Park
  Presenting Author