In most cases, you do not charge NYS sales tax to out-of-state customers. New York uses destination-based sourcing, so a sale of tangible goods shipped to a buyer in another state is sourced to that state and falls outside New York’s taxing authority.1New York State Department of Taxation and Finance. Find Sales Tax Rates The answer changes if the customer picks the item up in New York, if you’re selling a taxable service performed here, or if you have sales tax obligations in the buyer’s state instead.
Why Shipping Out of State Is Not Taxed by New York
New York taxes a sale based on where the buyer takes possession of the goods, not where the seller is located. Ship an order from a warehouse in Syracuse to a customer in New Jersey, and the sale is sourced to New Jersey. New York has no claim on the transaction.
This holds regardless of where your business sits in the state, where you store inventory, or where the order is processed. A Brooklyn e-commerce seller shipping to Florida, Texas, or Oregon collects no New York tax on any of those orders. The destination controls both whether tax applies and which rate applies, which is why in-state deliveries use the combined state and local rate for the buyer’s specific county, city, or district.2New York State Department of Taxation and Finance. Sales Tax Rate Publications
When You Still Charge New York Tax to an Out-of-State Customer
The destination rule has one exception that trips sellers up most often: in-person pickup. If an out-of-state customer walks into your New York location and takes the item with them, the sale is sourced to that New York location. A Connecticut tourist buying something at a shop in Albany pays Albany’s combined rate. Residence does not matter. Where the buyer takes possession does.
Services follow their own sourcing logic rather than the shipping-address rule. A repair performed on equipment located in New York is sourced to New York even if the owner is based elsewhere. A service performed entirely for a client in another state is generally sourced to that state. For services, the question is usually where the work is physically performed or where the benefit is delivered, depending on the type of service. Only services specifically listed in New York’s Tax Law are taxable in the first place; installation, maintenance, and repair services are on that list, while most professional services like legal, accounting, and general consulting are not.3New York State Department of Taxation and Finance. Products, Services, and Transactions Subject to Sales Tax
Pickups by Out-of-State Businesses Buying for Resale
If an out-of-state business picks up goods at your New York location to resell them, that pickup can still be exempt from New York sales tax. The buyer must give you a properly completed Form ST-120, New York’s Resale Certificate. Out-of-state purchasers who don’t hold a New York Certificate of Authority complete Part 2 of the form and provide their home state’s sales tax registration number.4New York State Department of Taxation and Finance. Form ST-120 Resale Certificate
Resale certificates from other states are not valid in New York. A New Jersey resale certificate handed across your counter does not protect you; the buyer has to complete New York’s own form.5New York State Department of Taxation and Finance. Exemption Certificates for Sales Tax Collect the completed certificate within 90 days of the sale. A certificate that arrives later shifts the burden of proving exemption onto both you and the buyer, and auditors scrutinize those transactions more closely. Keep every certificate on file with a clear link to the invoice it covers. Sales without a valid certificate on file are presumed taxable in an audit.
What Changes When You Sell Through a Marketplace
If you sell through a marketplace like Amazon, eBay, or Etsy, the question of whether you charge tax is usually taken out of your hands. New York’s marketplace facilitator law requires the platform to register and collect New York sales tax on your behalf once the platform exceeds $500,000 in gross receipts and 100 sales delivered into the state across all its sellers during the preceding four quarters.6New York State Department of Taxation and Finance. Sales Tax Collection Requirement for Marketplace Providers
When the marketplace collects, you are relieved of liability for that tax, provided the marketplace gave you a properly completed Form ST-150 certifying it will collect and any failure to collect was not caused by wrong information you supplied. The relief does not apply between affiliated companies.
Two limits are worth noting. The marketplace facilitator rule covers only tangible personal property; it does not reach services, restaurant food, hotel occupancy, or admissions. And if you also sell direct through your own website alongside the marketplace, those direct sales remain your responsibility regardless of what the platform handles.
You May Owe Tax in the Buyer’s State Instead
Shipping outside New York removes your New York collection duty. It does not necessarily remove tax from the transaction. If you have nexus in the buyer’s state, you may be required to register, collect, and remit that state’s sales tax at the rate for the buyer’s location.
Nexus is the legal connection that lets a state require you to collect. Two paths create it. Physical nexus comes from a tangible presence in the state: office space, a retail location, a warehouse holding inventory, or employees or agents working there. Even repeated trade show attendance can create it depending on frequency and duration. Economic nexus comes from sales volume alone, with no physical footprint required.
New York’s own economic nexus standard requires more than $500,000 in gross receipts from tangible personal property delivered into the state and more than 100 separate sales delivered into the state during the immediately preceding four sales tax quarters. Both conditions must be met.7New York State Department of Taxation and Finance. Registration Requirement for Businesses with No Physical Presence in New York State That bar is high. Most other states set their economic nexus threshold at $100,000 in sales or 200 transactions, and a few sit higher. If you ship into many states, tracking where you have crossed each state’s threshold is one of the harder operational parts of sales tax compliance, which is why automated tax calculation software exists.
If you don’t have nexus in the destination state, you don’t collect that state’s tax either. The transaction leaves your return entirely.
The Buyer’s Use Tax Obligation
When no sales tax is collected on a taxable purchase, most states expect the buyer to self-report an equivalent use tax. New York imposes use tax on taxable items and services used within the state when sales tax was not collected at the point of sale, including purchases from out-of-state sellers.8New York State Department of Taxation and Finance. Use Tax for Businesses Other states have parallel rules.
This matters for two reasons. First, if an out-of-state customer asks why you aren’t charging tax on their shipment, the accurate answer is that their state likely expects them to pay use tax directly. Second, use tax applies to your own business purchases too: if you buy equipment from an out-of-state seller who doesn’t charge New York tax, you owe use tax on that purchase. Individual consumer compliance is notoriously low, but business-to-business use tax is enforced aggressively through audits, so keep your purchase records in order.