AN ACT to exempt feminine hygiene products, Diapers, and Groceries from sales tax.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 105‑164.3 reads as rewritten:

§ 105‑164.3.  Definitions.

The following definitions apply in this Article:

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(88)      Feminine hygiene products. – Tampons, panty liners, menstrual cups, sanitary napkins, and other similar tangible personal property designed for feminine hygiene in connection with the human menstrual cycle but does not include grooming and hygiene products.

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(94)      Grooming and hygiene products. – Soaps and cleaning solutions, shampoo, toothpaste, mouthwash, antiperspirants, suntan lotions, and sunscreens, regardless of whether the items meet the definition of over‑the‑counter drugs.

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SECTION 2.  G.S. 105‑164.13 reads as rewritten:

§ 105‑164.13.  Retail sales and use tax.

The sale at retail and the use, storage, or consumption in this State of the following items are specifically exempted from the tax imposed by this Article:

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(13d)   Sales of diapers or incontinence underpads on prescription by an enrolled State Medicaid/Health Choice provider for use by beneficiaries of the State Medicaid program when the provider is reimbursed by the State Medicaid program or a Medicaid managed care organization, as defined in 42 U.S.C. § 1396b(m).

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(74)      Diapers.

(75)      Feminine hygiene products.

SECTION 3.  G.S. 105‑164.13B(b) is repealed.

SECTION 4.  G.S. 105‑467 reads as rewritten:

§ 105‑467.  Scope of sales tax.

(a)        Sales Tax. – The sales tax that may be imposed under this Article is limited to a tax at the rate of one percent (1%) of the following:

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(5)        The sales price of food that is not otherwise exempt from tax pursuant to G.S. 105‑164.13 but is exempt from the State sales and use tax pursuant to G.S. 105‑164.13B.

(5a)      The sales price of a bundled transaction that includes food subject to tax under subdivision (5) of this subsection, if the price of the food exceeds ten percent (10%) of the price of the bundle. A retailer must determine the price of food in a bundled transaction in accordance with G.S. 105-164.4D.

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(b)        Exemptions and Refunds. – The State exemptions and exclusions contained in Article 5 of Subchapter I of this Chapter, except for including the exemption for food in G.S. 105‑164.13B, apply to the local sales and use tax authorized to be levied and imposed under this Article. The State refund provisions contained in G.S. 105‑164.14 and G.S. 105‑164.14A apply to the local sales and use tax authorized to be levied and imposed under this Article. A refund of an excessive or erroneous State sales tax collection allowed under G.S. 105‑164.11 and a refund of State sales tax paid on a rescinded sale or cancelled service contract under G.S. 105‑164.11A apply to the local sales and use tax authorized to be levied and imposed under this Article. The aggregate annual local refund amount allowed an entity under G.S. 105‑164.14(b) for the State's fiscal year may not exceed thirteen million three hundred thousand dollars ($13,300,000).

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SECTION 5.  G.S. 105‑164.3(15) reads as rewritten:

(15)    Amenity. – A feature that increases the value or attractiveness of an entertainment activity that allows a person access to items that are not subject to tax under this Article and that are not available with the purchase of admission to the same event without the feature. The term includes parking privileges, special entrances, access to areas other than general admission, mascot visits, and merchandise discounts. The term does not include any charge for food, prepared food, and food or alcoholic beverages subject to tax under this Article.

SECTION 6.  This act becomes effective October 1, 2023, and applies to sales made on or after that date.