Sales Tax in New York
Sales tax is defined as the fee charged on the retail sale of goods and services. The New York state imposes a “general sales tax” on most goods and some services at a single rate currently at 4%.
In addition to the state’s sales tax rate, counties and cities can impose their own local sales tax rate.
Use tax is an equivalent tax that you pay on items you purchase outside the New York state, but then use or receive them in NY. The sales and the use tax are mutually exclusive, so you won’t pay the other if you pay one.
The State of New York Sales Tax
New York's Sales tax History
In 1933, sales tax was introduced in New York. It was imposed as a response to The Great Depression for one year, and it was at the rate of 1%. Then in 1934, the state authorized a local sales tax for New York City.
The general state sales tax replaced all locally administered sales taxes with a local option. This option authorized that counties and cities could only impose a maximum of 3% tax rate.
Special state approval was required in case they needed to increase the rate beyond the maximum. Both local and state sales taxes are administered by the New York State Department of Taxation and Finance.
New York's Sales Tax Rates
The New York State sales tax rate currently is 4%, but each county charges an additional sales tax between 3% and 4.5%. This means in New York, the sales rate that you can pay ranges between 7% to 8.5%, with the average in most counties and cities being 8%.
Counties based in the Metropolitan commuter transportation district (MCTD) are required to pay an extra sales tax at the rate of 0.375%.
So, to calculate the total amount of tax due on a sale, you multiply the item price before tax, by the combined state and local tax rate. And if applicable, you add the MCTD tax rate.
What is Taxed and What is Not?
In New York State, the majority of retail sales are subject to sales and use tax. Some items are taxed based on the buyer’s residency, rather than the location where the item was purchased. A good example of such an item is a vehicle.
There is tax exemption on several items in New York. These include prescribed medicines, groceries, newspapers, laundering and cleaning, and feminine products. Others include clothes and shoes that cost less than $110, and piped water.
Public utilities like phone services, gasoline, refrigeration, telegraph, and electricity, are taxable.
New York City taxes some services that are not taxed by the state. These services include massages, barber services, gym services, saunas, electrolysis, and beautician services.
Conclusion - New York Sales Tax
In the fiscal year 2022, New York state faces a potential gap of $15 billion. Some state policymakers have suggested an increase in taxes. This increase will mean a probable rise from 4%, which is the state’s current flat rate for sales tax.
Other useful articles:
- Sales Tax by State in the United States
- How to Verify Tax Exempt Certificate
- Verify Tax Exempt Resale Certificate by State
- What is a Tax Exempt Status
- VAT Taxes in Europe
- Sales Tax Thresholds by State
- Sales Tax in California
- Sales Tax in Florida
- Sales and Use Tax in New York