New York Sales Tax Rules: Rates, Collection, and Exemptions

New York sales tax starts with a 4% state rate and climbs from there once county, city, and transit-district add-ons are layered in, bringing the total you actually pay to roughly 7% in most of the state and 8.875% in New York City. The tax covers nearly all retail purchases of physical goods along with many services, utilities, and digital products, with a handful of significant exemptions — most visibly, clothing and footwear under $110 per item and most unprepared grocery food. Sellers with any physical presence in the state must register and collect, and remote sellers hit the same obligation once they cross $500,000 in New York sales and more than 100 transactions over the prior four quarters.

How the Rate Is Built

The 4% state rate is flat. Every county, and some cities and school districts, add a local rate on top, and an extra 0.375% applies to taxable sales inside the Metropolitan Commuter Transportation District, which covers New York City and the surrounding suburban counties.¹ New York City tops the scale at 8.875%. Most other counties sit between 7% and 8.5%.

For sellers, the rate is driven by the destination of the goods or service, not the seller’s own address. A business in a 7% county that ships to a buyer in an 8% county must collect at the buyer’s rate. The Department of Taxation and Finance publishes updated rate tables each quarter.²

What’s Taxed

Sales tax applies to every retail sale of tangible personal property unless a specific exemption covers the item. Tangible personal property means anything physical you can see, weigh, or touch: electronics, furniture, appliances, building materials.³ The tax also reaches a wide list of services:

Gas, electricity, steam, refrigeration, and telephone service.³
Information services — collecting, compiling, or analyzing information and furnishing reports.³
Installing, maintaining, or repairing tangible personal property, including vehicles.⁴
Interior decorating and design.³
Maintenance and repair of real property. Capital improvements that permanently add to the property are excluded, so fixing a broken furnace is taxable while installing an entirely new HVAC system generally is not.³

Software is taxable even when you never touch a disk. New York treats remotely accessed software — SaaS subscriptions, cloud-hosted applications — as a transfer of possession of tangible personal property, so the purchase is subject to sales tax. The local rate is tied to where you use or direct the use of the software, not where the vendor’s servers sit.⁵ Out-of-state vendors selling into New York are often caught off guard by this.

The Exemptions That Matter Most

Clothing and Footwear Under $110

Any article of clothing or pair of shoes selling for less than $110 is exempt from the 4% state rate. The threshold applies per item, so five $100 shirts in one transaction are all exempt.⁶ Fabric, thread, buttons, zippers, and similar materials used to make or repair exempt clothing also qualify, unless made from precious metals or stones. Some localities match the exemption; others continue to charge their local portion on sub-$110 clothing. The total you pay on a $90 jacket therefore depends on where you buy it.⁷

Grocery Food

Most unprepared food sold at grocery stores is exempt: canned goods, dairy, meat, produce, frozen meals, bread, packaged snacks like chips and pretzels. The exemption disappears once a seller prepares food for immediate consumption. Heated food, sandwiches hot or cold, food sold for on-premises eating, and items the seller arranges on plates or platters are all taxable. Carbonated beverages, candy, and pet food are always taxable regardless of how they’re sold.⁸

One trap for stores: if exempt food is bundled with a taxable item for a single price, the whole package becomes taxable. A cheese-and-cutting-board gift set loses the food exemption because the board is taxable and the two are sold together.⁸

Resale, Manufacturing, and Nonprofits

Purchases for resale are exempt because the tax is designed to land on the final consumer, not every link in the supply chain. Equipment used directly and predominantly in manufacturing or production is also exempt, as are most sales to government agencies and qualifying nonprofits.⁶ Claiming any of these requires the buyer to give the seller a properly completed exemption certificate at the time of sale or within 90 days after. Resale and manufacturing use Form ST-120; exempt organizations use Form ST-119. The seller keeps the certificate on file for at least three years from the related return’s due date, and if it goes missing during an audit, the seller owes the uncollected tax.⁹

Who Has to Collect

Any business with employees, inventory, an office, or other physical presence in New York has nexus and must register.¹⁰ Since the Supreme Court’s 2018 ruling in South Dakota v. Wayfair, pure sales volume can also trigger the obligation. New York requires remote sellers to register if, over the previous four sales tax quarters, both of the following are true:

Gross receipts from sales of tangible personal property delivered into New York exceeded $500,000, and
The seller made more than 100 such sales.¹¹

Crossing only one threshold doesn’t trigger the requirement. Once both are met, you must register for a Certificate of Authority and start collecting on future sales.¹²

Selling Through Amazon, Etsy, or eBay

If you sell through a marketplace, the platform is generally responsible for collecting and remitting the tax on your facilitated sales of tangible personal property delivered into New York. That duty applies whether or not you would need to register on your own. Platforms without a physical presence in New York follow the same $500,000 and 100-transaction tests; those with a physical presence must register regardless of volume. To confirm they’re handling collection, the platform either gives sellers a completed Form ST-150 within 90 days of facilitated sales or posts a public statement that it collects New York sales tax on facilitated sales. If a marketplace collects the wrong amount because the seller provided bad information, the platform is relieved of liability — provided the two are not affiliated, meaning one holds more than a 5% ownership interest in the other.¹³

Use Tax: When You Owe Even Though No One Charged You

Use tax is the companion to sales tax. If you buy something without paying New York sales tax and then use it in the state, you owe use tax at the same combined rate the sale would have carried locally.¹⁴ The classic case is ordering from an out-of-state seller that doesn’t collect New York tax and having the item shipped to a New York address. It also applies if you buy in a lower-rate New York locality and bring the item into a higher-rate one; the difference is owed.

One carve-out: if you bought property while a nonresident and later moved to New York, you don’t owe use tax on items you already owned before relocating. Registered vendors report use tax on their regular sales tax returns, and individual consumers report it on their state income tax return.

Registering as a Vendor

You cannot legally make a single taxable sale in New York without first obtaining a Certificate of Authority from the Department of Taxation and Finance, and you must apply at least 20 days before you plan to start selling.¹⁵ Registration runs through the New York Business Express portal using Form DTF-17. You’ll need a Federal Employer Identification Number, names and identifying information for all owners and officers, your business address, and an expected start date.¹⁶ There is no fee, and the certificate must be displayed at your place of business once issued.

Every owner, partner, and officer named on the application is personally on the hook for any sales tax the business collects but fails to send to the state. The Tax Department regularly pursues individuals when a business closes with unpaid sales tax, and administrative law judges have interpreted “responsible person” broadly.

Filing and Paying

Most vendors file quarterly using Form ST-100. The periods run March–May, June–August, September–November, and December–February, with each return due 20 days after the quarter ends.¹⁷ Higher-volume sellers file monthly on Form ST-810; very low-volume sellers may be placed on an annual schedule. If you prepare your own returns, use a computer, and have broadband, electronic filing through the Sales Tax Web File system is mandatory. The portal allocates what you owe to each taxing jurisdiction and accepts ACH debit; credit cards work but carry processing fees.

Qualifying vendors who file on time and pay in full can claim a vendor collection credit equal to 5% of the tax reported on the return, capped at $200 per quarterly or annual period. It covers state, county, city, and school district sales taxes plus certain supplemental taxes.¹⁸

What Noncompliance Costs

Filing a return late by 60 days or less brings a penalty of 10% of the tax due for the first month, plus 1% for each additional month the return stays outstanding, up to 30%. The minimum is $50.¹⁹ Past 60 days, or if you never file, the penalty becomes the greatest of the same percentage calculation, the lesser of $100 or 100% of tax due, or $50. Even a zero-balance return filed more than 60 days late costs at least $50.

Selling without a Certificate of Authority is its own violation. The penalty runs up to $500 for the first day you operate without one and up to $200 for each additional day, capped at $10,000 in aggregate, and it stacks on top of the tax you should have been collecting plus interest.²⁰

Buying a Business: The Bulk Sale Notice

If you’re buying a business or acquiring its assets, New York’s bulk sale rules exist to keep the seller’s unpaid sales tax debt from following the assets to you. Before paying for or taking possession, the buyer must file Form AU-196.10 with the Tax Department at least 10 days in advance, sent by registered or certified mail with return receipt or hand-delivered to the Department’s Albany office.²¹

Skip this step and the buyer can become personally liable for the seller’s outstanding sales tax obligations. The Department has five business days after receiving the notice to respond, and if the seller owes back taxes, it may require a portion of the purchase price to be held in escrow until the liability is settled. Closing without this clearance can turn a profitable acquisition into a liability overnight.²¹

1
New York State Department of Taxation and Finance. Find Sales Tax Rates
2
Department of Taxation and Finance. Sales Tax Rate Publications
3
New York State Senate. New York Code TAX 1105 – Imposition of Sales Tax
4
Department of Taxation and Finance. Quick Reference Guide for Taxable and Exempt Property and Services
5
Department of Taxation and Finance. Computer Software
6
New York State Senate. New York Code TAX 1115 – Exemptions From Sales and Use Taxes
7
Department of Taxation and Finance. Clothing and Footwear Exemption
8
Department of Taxation and Finance. Food and Food Products Sold by Food Stores and Similar Establishments
9
Department of Taxation and Finance. Exemption Certificates for Sales Tax
10
New York State Senate. New York Code TAX 1101 – Definitions
11
Department of Taxation and Finance. Registration Requirement for Businesses With No Physical Presence in New York State
12
Department of Taxation and Finance. Do I Need to Register for Sales Tax?
13
Department of Taxation and Finance. Sales Tax Requirements for Marketplace Providers
14
New York State Senate. New York Code TAX 1110 – Compensating Use Tax
15
Department of Taxation and Finance. How to Register for New York State Sales Tax
16
New York State Department of Taxation and Finance. Instructions for Form DTF-17
17
Department of Taxation and Finance. Filing Requirements for Sales and Use Tax Returns
18
Department of Taxation and Finance. Vendor Collection Credit
19
Department of Taxation and Finance. Sales and Use Tax Penalties
20
New York Codes, Rules and Regulations. 20 CRR-NY 533.1 – Registration Requirement
21
Department of Taxation and Finance. Bulk Sales