The New York Clothing Sales Tax Exemption
byApril 28, 2020
I’ve got news about your next 5th Avenue shopping spree. (That’s still a thing, right?) Clothing in New York state is tax exempt.
…In some places.
And if you sell online through your own shopping cart, you have to make sure you get the highly-complicated New York clothing sales tax exemption right, or your merchants can quickly get into hot water with the New York Department of Taxation and Finance. (Don’t worry – the TaxJar API has you covered, but we’ll get to that later.)
How New York’s Clothing Sales Tax Exemption Works
Items of clothing in New York under a $110 purchase price are exempt from New York’s 4% state tax. This exemption applies only to clothing and footwear worn by humans, as well as fabric, zippers, yarn, buttons, etc. used to make or repair exempt clothing.
The exemption does not apply to:
- Clothing and footwear sold for over $110
- Costumes or rented formal wear
- Items made from pearls, precious or semiprecious stones, jewels, or metals, or imitations thereof, that are used to make or repair clothing eligible for exemption
- Athletic equipment
- Protective devices (such as motorcycle helmets)
So setting taxability in your shopping cart is already confusing. You can’t just set clothing to non-taxable in New York, because of that “sold for under $110 rule.”
But wait, there’s more.
We said clothing under $110 is exempt from New York state tax.
Some local areas still require merchants to charge local sales tax rates on clothing less than $110.
Then there’s the Metro Commuter Transportation District (MCTD) tax, which is a 0.375% tax applicable in the city of New York and Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester counties. In some counties the MCTD is applicable to clothing sales under $110 and in some counties it isn’t. This depends on whether or not the county has elected to exempt clothing form local taxes. Confusing, right?
Tl;dr – If you’re building a shopping cart, it’s almost impossible to figure out just how to charge sales tax on clothing in New York. That’s just one of many reasons we built the TaxJar API.
New York’s complicated clothing exemption is just one of many sales tax nightmares that crop up around the U.S., and the TaxJar API takes care of all the complicated rules for you, so you can get back to the fun part of running a shopping cart or online marketplace. Learn more about TaxJar and get started here: TaxJar.com.
Or do you still want to know more about how the New York clothing sales tax exemption works? I commend you. Let’s delve deeper.
New York Clothing Sales Tax Exemption Examples
First of all, if you sell online you need to know that New York is a destination-based state that allows for local rates. For the purposes of sales tax collection and reporting, this is the most complicated kind of state. (You can read more here about destination-based states and their slightly friendlier counterparts, origin-based states, here.)
So if you are a merchant with sales tax nexus in New York, then you need to charge sales tax based at the rate of your buyer’s ship to address.
If your buyer lives in an area that fully exempts clothing (like New York City) – As long as the item of clothing is under $110, your customer won’t pay any sales tax on it. Not New York’s 4% state tax, not any local taxes and not the 0.375% MCTD tax. So a $100 pair of pants would be entirely tax free. Your customer would just pony up the $100 (not including shipping – that’s a whole other story).
If your buyer lives in a county that doesn’t exempt clothing under $110 from local sales tax – So you sell to a buyer in Mahopac, which is in Putnam County. Putnam County has a 4% local sales tax and is one of the counties that has the 0.375% MCTD tax . And Putnam elects not to exempt clothing under $110. So for this sale, you would not charge your customers the 4% New York state sales tax rate, but you would charge them the 4% local sales tax rate for Putnam County and the 0.375 MCTD tax. In this case, your customer would pay a sales tax rate of 4.375% on a $100 pair of pants, which is $104.38.
If you sell a mix of exempt items and tax exempt items – Say you sell a $100 pair of pants and a $150 cashmere sweater to a buyer in New York City. You would charge zero sales tax on the pants but the full New York city sales tax rate on the sweater. But say you sell those same items and ship them to a buyer in Mahopac. You would charge the 4% Putnam County local sales tax rate and the 0.375% MCTD rate on both items, but you would also charge the 4% New York state sales tax rate on that cashmere sweater.
It’s definitely confusing! (Don’t forget, the TaxJar Sales Tax API is here to take this off your hands so you never have to think about this ever again.)
Summary of the New York Clothing Sales Tax Exemption
- New York state doesn’t require state sales tax (4%) on clothing items sold for under $110
- Some counties also exempt clothing under $110 from local tax rates
- Some counties do NOT exempt clothing under $110 from local tax rates. In this scenarios, you may find yourself not charging New York’s 4% sales tax rate, but charging local rates
- In a few counties, local rates also include New York’s 0.375% Metro Commuter Transportation District (MCTD) tax
- Clothing sold for $110 or over is always fully taxable in New York
- New York is a destination-based sales tax state, so if you sell online you’d always charge the sales tax rate at your buyer’s location
- You can read more about the New York clothing sales tax exemption in this publication.
- If you run a shopping cart or marketplace, the TaxJar API can take care of this complexity for you.
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