What is the pink tax and why does it matter?

What is the pink tax?

You’re strolling down the aisle of your local supermarket, browsing everyday products. You pick up two boxes of razors made by the same company: One razor, made for women, comes in a pink box and is priced at $5.14. The other box is shades of blue and black. The price tag? $4.03.

Women don’t ask for personal products to come in pink packaging, and they certainly don’t deserve to be price-gouged for merely wanting smooth legs. If you’re feeling annoyed by your razor costing more, or the woman in your life’s razor costing more, you are feeling the result of the “pink tax” – the extra amount of money that women pay for ordinary products such as the aforementioned razors, haircuts and even dry-cleaning.

Further, almost all states exempt non-luxury necessities like groceries and medication from their general sales tax, but 20 of them charge tax on feminine products like tampons and pads. This gender-based pricing discrepancy is also known as the “tampon tax,” referring to a fee that women are charged for feminine hygiene products. Currently, nearly half of U.S. states charge sales tax on menstrual products, while exempting other necessities like prescriptions.

Allyson Davis, the deputy head of the Office of Women's Affairs for J.P. Morgan, said: “While some states have certain preventative policies in place, there are currently no federal policies that prohibit gender-based price discrimination. In tandem with the fact that women statistically live longer than men, women often end up paying much more for gender-based products over the course of a lifetime. For example, it was estimated that women in California alone were paying roughly $2,300 more for goods and services in a year as a result of gender-based marketing and pricing. Not only is this fundamentally unfair, but it can impede on many women's long-term investing and wealth management goals.”

The pink tax can mean different considerations for women when building a financial plan and goals. Davis continues, “Like many other things in life, it comes down to your long-term vision for financial health. Leading with the question, ‘What could I do with the money saved from this transaction?’ not only puts into perspective how much gender-based pricing costs women over a lifetime, but your answers to this question can help you stay the course for meeting your financial goals. Whether you'd like to save that money or put it to work in a portfolio is up to you – that's what makes having a financial plan in place and the right team to help you crystallize and execute it so important.”

The history of the pink tax

While gender-based pricing has existed since the creation of the U.S. tax system during the 1930s to 1960s, it was in the 1980s where the use of the color pink to distinguish women’s products was first popularized. This trend of gendered packaging has persisted and has further enabled price disparities.

A landmark California-based study in the 1990s called out the resulting increase in women’s expenses, which led to the passing of the state’s Gender Tax Repeal Act of 1995 to prevent businesses from taking part in gender-based pricing.

A 2015 government study in the U.S. found that, across 800 gender-specific products from nearly 100 brands, personal care products marketed toward women were 13% more expensive than similar men’s products. Another study in the U.S. concluded that the prices for dry cleaning women’s dress shirts were about 90% higher than for men’s shirts.

However, more recent research suggests that the current reality is more nuanced. A 2021 national study by researchers from the University of Chicago, Northwestern University and Cornerstone Research looked at nine categories of personal care products and found that unit prices for women’s products were higher than those for men’s products in only four: bar soap, body wash, deodorant and razor blades. In three of the other categories, the unit prices for men’s products were higher.

These price differentiations were largely attributed to differences in product ingredients and manufacturing costs.

States have steadily worked to make changes. At the start of 2023, both Virginia and Iowa joined the ranks of states exempting personal hygiene products from tax. Companies like CVS are also making an effort to eliminate the pink tax. CVS Health announced it would enact a 25% reduction in the price of CVS-brand menstrual products and cover the existing sales tax in 12 states. While strides are certainly being made, there is still more work to be done to eradicate gendered pricing.

How gender-based pricing impacts people – and what to do about it

Davis continues, “It’s unacceptable to charge women and girls more for the same underlying products. We must continue to talk about it and work to course correct this system that perpetuates gender-based pricing.”

So what can one do about eradicating the pink tax? Social media has sprung into action on this agenda, with social media hashtags such as #genderpricing, #pinktax, and #AxThePinkTax bringing attention to the issue.

In addition to social media, there are simple acts of creativity such as buying men’s-labeled products to save money. Davis concludes, “There are savvy consumers who buy the men’s brand of shaving cream and other cosmetics because they are cheaper and have the same ingredients as the women’s brands.”

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