New York City Sales Tax: Rate, Exemptions, and Higher Rates

The New York City sales tax rate is 8.875 percent on most purchases, among the highest combined rates in the country. That total is built from three layers: a 4 percent New York State tax, a 4.5 percent city tax, and a 0.375 percent Metropolitan Commuter Transportation District (MCTD) surcharge that funds regional transit.1NYC.gov. Business NYS Sales Tax Several exemptions, most notably one for clothing and footwear priced under $110 per item, can bring what you actually pay at the register well below that headline rate.

What You Pay Sales Tax On

Nearly all physical products carry the full 8.875 percent: furniture, electronics, alcohol, cars, and the rest of what you can carry out of a store. New York also taxes a wider range of services than many states, which catches people off guard. Taxable services include:1NYC.gov. Business NYS Sales Tax

  • Restaurant meals and catering
  • Haircuts, manicures, pedicures, massages, tanning, tattooing, and electrolysis
  • Health clubs, gyms, and weight-control salons
  • Building cleaning and maintenance, detective agencies
  • Admission charges to amusement venues and entertainment
  • Credit rating and reporting services

Prewritten software is taxable whether you buy it on a disc, download it, or access it through a cloud platform. Custom software built to your specifications is not.2Department of Taxation and Finance. Computer Software Other digital media sit on the other side of the line: downloaded music, e-books, and streaming subscriptions are generally not taxed. A physical book is taxable; the same title as an e-book is not.

Most professional services, including those provided by lawyers, accountants, doctors, and educators, are not subject to sales tax.3Department of Taxation and Finance. Products, Services, and Transactions Subject to Sales Tax Laundry, dry cleaning, tailoring, pressing, and shoe repair are also exempt.4Department of Taxation and Finance. Quick Reference Guide for Taxable and Exempt Property and Services

The Clothing and Footwear Exemption Under $110

Clothing and footwear priced under $110 per item are fully exempt from both the state and city sales taxes.1NYC.gov. Business NYS Sales Tax The threshold applies per item, not per receipt. Three shirts at $35 each ring up tax-free because no single item hits $110. A single coat at $110 or more, by contrast, is fully taxable on the whole price, not just the amount above $110.5Department of Taxation and Finance. Tax Bulletin ST-122 – Clothing and Footwear Exemption

Not everything worn qualifies. These are always taxable regardless of price:5Department of Taxation and Finance. Tax Bulletin ST-122 – Clothing and Footwear Exemption

  • Jewelry, watches, and similar accessories
  • Costumes and rented formal wear
  • Protective and sports equipment, such as hard hats, tool belts, safety goggles, and bicycle, sport, or motorcycle helmets
  • Sport-specific gear, such as ice skates, roller skates, hockey gloves, and baseball fielders’ mitts

Groceries, Prepared Food, and Drinks

Unprepared food bought at a grocery store for home consumption is exempt. The line between tax-free groceries and taxable prepared food depends on how the food is sold, not what it is. Food becomes taxable when it is sold heated, sold for on-premises eating, or prepared and arranged by the seller in a ready-to-eat form.6Department of Taxation and Finance. Food and Food Products Sold by Food Stores and Similar Establishments

A few familiar examples:6Department of Taxation and Finance. Food and Food Products Sold by Food Stores and Similar Establishments

  • A dozen bagels, whole or sliced, is exempt. A toasted bagel with cream cheese is taxable.
  • Frozen or refrigerated pizza is exempt. Hot pizza is taxable.
  • Pre-packed ice cream sold by weight is exempt. A scooped cone or sundae is taxable.
  • Sliced cold cuts sold by weight are exempt. Cold cuts arranged on a platter are taxable.
  • A hot rotisserie chicken is taxable. The same chicken cooled, packaged, and sold from a refrigerated case is exempt.

If the store heated it, plated it, or made it ready to eat, you pay tax. If it’s packaged, unheated, and meant to be taken home and prepared, you don’t.

Medicine, Vitamins, and Drinks

Prescription and nonprescription medicines are exempt.3Department of Taxation and Finance. Products, Services, and Transactions Subject to Sales Tax Medical equipment and supplies used to cure, treat, or prevent illness, or to correct a physical incapacity, are also exempt, including hospital beds, wheelchairs, crutches, walkers, respirators, and orthodontic appliances. To qualify, the item must be primarily and customarily used for medical purposes.7Cornell Law School – Legal Information Institute (LII). N.Y. Comp. Codes R. and Regs. Tit. 20, 528.4 – Drugs and Medicines; Medical Equipment and Supplies

Vitamins, minerals, herbal supplements, protein powders, protein bars, and nutritional shakes are exempt in any form. Sports drinks, energy drinks, and carbonated beverages are taxable, even when they’re fortified with vitamins. That includes Gatorade, Red Bull, Monster Energy, and vitaminwater.8Department of Taxation and Finance. Dietary Foods and Health Supplements

Higher Rates: Manhattan Parking and Hotel Stays

Manhattan Parking

Parking, garaging, or storing a motor vehicle in Manhattan is taxed at a combined 18.375 percent, which layers an 8 percent city surtax on top of the standard components.1NYC.gov. Business NYS Sales Tax Parking in the other four boroughs is taxed at the standard 8.875 percent.9Department of Taxation and Finance. Form ST-810.5-ATT Taxes on Parking Services in New York City

Manhattan residents who rent a long-term space (one month or more) for a personally owned vehicle can apply for an exemption that drops the rate from 18.375 percent to 10.375 percent. The vehicle must be registered to the applicant’s Manhattan address and used only personally; commercial and company vehicles don’t qualify. You apply through the NYC Department of Finance and must deliver the certificate to the parking facility before the lower rate takes effect. No refunds are issued for tax paid before the certificate is presented.10NYC.gov. Manhattan Resident Parking Tax Exemption

Hotel Rooms

Hotel stays carry the 8.875 percent sales tax plus additional occupancy taxes. The city imposes a separate hotel room occupancy tax that includes a flat per-room, per-day fee ranging from $0.50 to $2.00 depending on the nightly rate, plus a percentage-based occupancy tax.11NYC.gov. Business Hotel Room Occupancy Tax New York State adds a $1.50 per unit, per day fee on top of that.12Department of Taxation and Finance. Hotel and Short-Term Rental Unit Occupancy Total taxes and fees on a hotel bill run well above the base 8.875 percent.

How the Tax Is Calculated at the Register

Discounts, Coupons, and Rebates

When a store offers a discount that reduces the selling price, such as a clearance markdown or store-issued coupon, sales tax is calculated on what you actually pay.13Department of Taxation and Finance. Taxable Receipt – How Discounts, Trade-Ins, and Additional Charges Affect Sales Tax Manufacturer coupons and rebates work differently: because the manufacturer reimburses the store, the full original price remains the taxable amount even though you pay less out of pocket.14Department of Taxation and Finance. Coupons and Food Stamps – Tax Bulletin ST-140

Shipping and Delivery

If the item is taxable, any shipping, handling, or delivery charge the seller adds to the bill is also taxable. If the item is exempt, so is the delivery charge. When a single bill combines taxable and nontaxable items, the whole bill, including delivery, becomes taxable unless the seller separately lists each charge and fairly allocates the delivery between them.15Department of Taxation and Finance. Shipping and Delivery Charges If you arrange delivery independently through a third-party carrier and receive a separate invoice from that carrier, the transportation charge is not subject to sales tax.

Merchants must separately state the total sales tax on every receipt or invoice.13Department of Taxation and Finance. Taxable Receipt – How Discounts, Trade-Ins, and Additional Charges Affect Sales Tax

Online and Out-of-State Purchases

Large online retailers generally collect New York sales tax. Out-of-state sellers are required to do so once, during the preceding four sales tax quarters, they exceed $500,000 in gross receipts from New York sales and more than 100 sales delivered to the state. Both thresholds must be met.16New York State Senate. New York Tax Law 1101 – Definitions Marketplaces like Amazon count their sellers’ transactions toward those thresholds and typically collect and remit the tax themselves.

When no seller collects the tax, for example on a purchase made while traveling or from a small online retailer that falls below those thresholds, you owe compensating use tax at the same 8.875 percent rate on items you bring back and use in the city.17New York State Senate. New York Tax Law 1110 – Compensating Use Tax Individuals can report use tax on Form ST-141 or on their New York State income tax return. If you already paid sales tax in another state on the same item, you can generally claim a credit for what you paid there and owe only the difference up to the 8.875 percent New York City rate.