Restaurant Tax in NYC: Rate Breakdown, Exemptions, and Filing

The restaurant tax in NYC is 8.875%, and it applies to almost everything a restaurant sells: dine-in meals, hot takeout, cold sandwiches, soft drinks, alcohol, cover charges, and usually the delivery fee too. The rate is identical in all five boroughs and doesn’t change with the price of the meal or the type of restaurant.

What the 8.875% Is Made Of

The number on your receipt is three taxes stacked together:¹

4% New York State sales tax on food and drink sold by restaurants, taverns, and caterers.²
4.5% New York City local sales tax.³
0.375% Metropolitan Commuter Transportation District surcharge, which funds regional transit and covers all of New York City.⁴

A $12 lunch and a $200 dinner are taxed at the same percentage. A slice in the Bronx and a tasting menu in Manhattan carry the same rate.

What’s Taxable on a Restaurant Bill

If you sit down and eat it, it’s taxed. Any food or drink sold by a restaurant, tavern, or caterer for on-premises consumption is taxable, including cold items like salads and pre-made sandwiches.² Eating at a counter or in a chair the restaurant provides counts as on-premises.

Takeout and delivery are also taxable when the food is heated, cooked to order, or served with help from the vendor after delivery. Food counts as “heated” if the vendor uses warming trays, heat lamps, ovens, or similar equipment to keep it above room temperature.⁵ A hot soup for pickup is taxable. A rotisserie chicken under a heat lamp is taxable.

Sandwiches are always taxable regardless of temperature, even a cold deli sandwich sold to go.⁵ Alcoholic beverages, soft drinks, bottled water, and fruit drinks with less than 70% real juice are taxable in every context.⁶ Cover charges, entertainment fees, and minimum spending requirements are part of the taxable receipt too.

When Restaurant Food Isn’t Taxed

Food escapes the 8.875% only when the sale looks like a grocery transaction. All three of these conditions have to be met at once: the food is unheated, it’s sold for off-premises consumption, and it’s in the same form, condition, quantity, and packaging a grocery store would use.⁶

A bakery selling a dozen bagels in a sealed bag, unsliced and untopped, is making a grocery-style sale. That’s exempt. Ask for the bagel sliced with cream cheese and it becomes prepared food and the tax applies. A pizzeria selling an unheated frozen pizza in a box is making an exempt sale; a hot slice is always taxable.

Bulk purchases of unheated items sold by weight or by the dozen for off-premises consumption generally qualify for the exemption.⁵ A tray of cold cookies packaged like you’d find in a supermarket is exempt. Those same cookies arranged on a plate for an office meeting are taxable. Utensils, plates, and napkins bundled with the food tend to push a sale into taxable territory because they signal the food is meant to be eaten right away.

Delivery Fees and Third-Party Apps

When the food on the bill is taxable, the delivery charge billed with it is taxable too. New York treats delivery fees as part of the overall receipt when they’re billed alongside a taxable product.⁷ Since almost all restaurant food sold for delivery is taxable (heated, a sandwich, or otherwise prepared), the fee almost always carries the 8.875% along with it.

If a single delivery mixes taxable and exempt items, the entire delivery charge is taxable unless the restaurant allocates it proportionally between the two. Most restaurants don’t do that, so the whole fee gets taxed.⁷

For orders placed through a third-party delivery app, the platform is typically the one collecting and remitting the sales tax under New York’s marketplace provider rules.⁸ The rate the customer pays is the same; it just shows up on the app’s charge rather than the restaurant’s.

Tips, Mandatory Gratuities, and Service Charges

A tip you write in on the receipt is not taxable. Because you control the amount and the restaurant doesn’t dictate it, that money isn’t part of the restaurant’s taxable receipts.⁹

Mandatory gratuities, like the 20% a restaurant automatically adds for a large party, can still avoid sales tax, but only if all three of these are true:

The charge is shown separately on the bill.
It’s specifically identified as a gratuity.
The restaurant passes the entire amount to its employees.

Miss any one of those and the mandatory charge becomes part of the taxable receipt.⁹ The label matters. Anything called a “service charge,” “administrative fee,” or similar is always taxable, even if the money ends up with the staff. A restaurant that calls it a “service fee” instead of a “gratuity” is creating a taxable line item.

Tax-Exempt Buyers and Employee Meals

Some buyers skip the tax entirely. Government agencies use Form ST-122 and qualifying nonprofits use Form ST-119.1 to make tax-free purchases at restaurants.¹⁰ A verbal claim isn’t enough; the certificate has to be presented and kept on file.

Meals given free to employees on their scheduled shifts aren’t subject to sales tax, as long as the employer takes no payment and the meal’s value isn’t counted as income under federal or state tax law.¹¹ Charge the employee anything, even a discount, and sales tax applies to that amount.

Filing, Penalties, and Records for Restaurant Owners

Most NYC restaurants file sales tax quarterly. Annual filing is only available if your total tax across four quarters is $3,000 or less, which rules out any restaurant doing meaningful volume.¹² The 2026 quarterly due dates are March 20, June 22, September 21, and December 21.¹³ Returns go through the state’s Sales Tax Web File system, with payment pulled directly from a bank account.¹⁴

Late returns are expensive. A return filed within 60 days of the deadline draws a penalty of 10% of the tax due for the first month, plus 1% for each additional month, capped at 30%, with a $50 minimum.¹⁵ Willfully failing to pay collected tax is treated as fraud, with a penalty of twice the unpaid amount plus interest, and the Tax Department can revoke the Certificate of Authority a restaurant needs to operate.¹⁶

Keep sales tax records, including guest checks, for at least three years from the return’s due date or filing date, whichever is later.¹⁷ Hold them longer if an audit or proceeding is open. Guest checks can’t be destroyed early without written permission from the Tax Department’s Audit Bureau.

1
New York City Department of Finance. Business NYS Sales Tax
2
New York State Senate. New York Tax Code 1105 – Imposition of Sales Tax
3
New York State Senate. New York Tax Law 1210
4
New York State Senate. New York Tax Code 1109 – Sales and Compensating Use Taxes for the Metropolitan Commuter Transportation District
5
Cornell Law School. 20 NYCRR 527.8 – Sale of Food and Drink
6
New York State Department of Taxation and Finance. Listings of Taxable and Exempt Foods and Beverages Sold by Food Stores
7
New York State Department of Taxation and Finance. Shipping and Delivery Charges
8
New York State Department of Taxation and Finance. Sales Tax Requirements for Marketplace Providers
9
New York State Department of Taxation and Finance. Gratuities and Service Charges
10
New York State Department of Taxation and Finance. Sales Tax Exemption Documents
11
New York State Department of Taxation and Finance. Purchases by Restaurants, Taverns, and Similar Establishments
12
New York State Department of Taxation and Finance. Filing Requirements for Sales and Use Tax Returns
13
New York State Department of Taxation and Finance. 2026 Tax Filing Dates
14
New York State Department of Taxation and Finance. File Online with Sales Tax Web File
15
New York State Department of Taxation and Finance. Sales and Use Tax Penalties
16
New York State Senate. New York Tax Code 1145 – Penalties and Interest
17
Cornell Law School. 20 NYCRR 533.2 – Records To Be Kept