Clothing is one of the many items subject to sales tax in the state of New York. The current sales tax rate for clothing is 4%, which is the same as the general sales tax rate for most goods and services in the state. However, there are certain exemptions and special rules that apply to clothing sales in New York.
One of the most notable exemptions for clothing sales in New York is the clothing and footwear exemption for items sold for less than $110. This means that clothing and footwear items that are sold for less than $110 are not subject to sales tax. This exemption applies to both in-store and online purchases and can provide significant savings for consumers. However, it’s important to note that any clothing item that is sold for more than $110 is subject to the full sales tax rate of 4%.
Another important exemption to note is the sales tax exemption for clothing and footwear that are sold to schools, religious organizations, and other non-profit organizations. These organizations are exempt from paying sales tax on purchases made for their own use. However, they need to have a valid exemption certificate issued by the Department of Taxation and Finance to be eligible for the exemption.
There are also special rules for certain types of clothing sales in New York. For example, sales of clothing that are made through vending machines are subject to a special sales tax rate of 3.625%. This is a lower rate than the general sales tax rate of 4% and is intended to provide a small break for consumers who purchase clothing through vending machines.
Online retailers who are not physically located in New York State are considered remote sellers and are required to collect sales tax on items shipped to New York. This rule is known as “Economic Nexus” and it applies to retailers who do more than $100,000 in sales in New York State or make at least 200 sales transactions in the state.
Also, note that New York State applies both sales tax and use tax to clothing purchases. Use tax is similar to sales tax, but it applies to goods and services that are purchased outside of the state but used or consumed within the state. This can include things like online purchases from out-of-state retailers, or items that were purchased on a trip outside of New York. The use tax rate is the same as the sales tax rate and is typically paid by the consumer.
In addition to the sales tax and use tax, there are other taxes that may be applicable to clothing sales in New York. For example, there is an additional “luxury tax” that may apply to certain high-end clothing items. This tax is intended to generate additional revenue for the state and is typically applied to items that are considered to be non-essential.
It’s also important for clothing retailers operating in New York State to keep accurate records of all sales and purchases, including invoices and receipts, in order to ensure compliance with state sales tax laws and to be able to respond to any audits or questions from the Department of Taxation and Finance.
Tax-free shopping in New York for tourists
Tourists visiting New York may be able to take advantage of tax-free shopping opportunities in the state. The New York State Tax Department offers a “sales tax exemption certificate” (Form ST-129) which allows eligible out-of-state visitors to purchase certain items without paying sales tax. The certificate can be obtained from participating retailers and must be filled out by the customer and the retailer.
To qualify for the exemption, the purchase must be for personal use and must be taken out of New York State within 90 days of the date of purchase. Eligible items include clothing and footwear that are sold for less than $110 per item, as well as certain items that are used or consumed within the state, such as hotel rooms and rental cars.
It’s important to note that not all retailers participate in the tax-free program for tourists and that certain items, such as jewelry and watches, are not eligible for the exemption. It’s also important to keep receipts and other documentation of the purchase to be able to prove that the item was eligible for the exemption and that it was taken out of New York State within the 90-day time frame.
In addition to the sales tax exemption certificate, there are other tax-free shopping opportunities available to tourists in New York. For example, many cities and towns offer tax-free weekends where certain items, such as clothing and school supplies, are exempt from sales tax. These weekends typically occur during the back-to-school season and can provide significant savings for tourists making purchases.
It’s also important to note that some cities and towns in New York State have their own local sales tax rate, which may be different from the state sales tax rate. Tourists should be aware of these local rates and should check with the retailer to ensure that they are getting the correct amount of sales tax exemption.