The majority of states in the United States levy a sales tax on retail products and services. New York is no exception. The state sales tax is very minimal, but when combined with taxes from different counties and cities, it can add up to a sizable sum. Continue reading to learn about the New York sales tax rate, how to calculate it, and how it varies across by city.
What Is Sales Tax?
When reading about sales tax in New York, you’ll come across the term “Sales and Use Tax.”
Sales tax is levied on products and services purchased inside a state. Use tax is an analogous tax paid on things purchased outside of the state. It ensures that out-of-state shops do not gain solely because they are exempt from paying in-state sales tax. In New York, the use tax is the same as the sales tax. The two taxes are also mutually exclusive, which means that if you pay one, you won’t have to pay the other.
Consider the following scenario to see how use tax works: Assume you live in New York and buy a PC somewhere in the state. The merchant will charge the standard New York sales tax. However, if you buy a computer in New Hampshire, the seller will not collect New York sales tax. That implies you can get the computer without having to pay the whole tax. As a result, New York levies a use tax. Residents in New York are required to record their out-of-state spending on their New York income taxes.
What is the New York Sales Tax Rate in 2023?
The sales tax in New York can range from 7% to 8.875%, with most counties and cities collecting an additional 8%.
The state sales tax rate in New York is 4%, and the average NY sales tax after municipal surtaxes is 8.48%.
The New York sales tax does not apply to groceries, prescription pharmaceuticals, or non-prescription drugs.
Counties and localities can levy an extra 4.875% local sales tax, for a total combined sales tax of 8.875%.
In addition to the state sales tax, New York has 2158 special sales tax jurisdictions with municipal sales taxes.
New York’s state sales tax is lower than that of 86.5% of states.
New York counties and cities are permitted to levy a local sales tax in addition to the state sales tax, and all municipalities have done so.
If an out-of-state merchant produces more than $10,000 in sales through in-state affiliates, products sold remotely via magazine or the Internet and sent into New York may be compelled to charge the applicable sales tax rate for the town in where the items were acquired. This is the effect of New York’s so-called “Amazon Law,” which requires Amazon.com to pay New York sales taxes.
Finally, there are special sales tax exemptions that allow college textbooks and clothing products costing under $110 (as of April 2012) to be purchased tax-free. Clothing transactions may still be subject to local sales taxes, including in all five counties of New York City.
Sales Tax Exemptions in New York
Most prescription pharmaceuticals, non-prescription drugs, and consumables are exempt from sales tax in New York. In most states, basics such as groceries, clothing, and pharmaceuticals are either excluded from sales tax or taxed at a lesser rate.
Some things, such as pricey apparel, unhealthy food or drinks like soda, and certain non-essential drugs, may not be eligible for these reduced sales tax rates. Candy and drink are not considered groceries in New York, so they are not subject to lower grocery sales tax rates. In addition to the sales tax, other commodities such as gasoline, alcohol, and cigarettes are subject to various excise taxes in New York.
Alcohol and prepared food (including restaurant meals and some prefabricated grocery items) are subject to a higher sales tax rate in several states. The New York sales tax applicable to the sale of automobiles, watercraft, and real estate may also differ by jurisdiction.
New York Sales Tax Certificate of Exemption
Unlike a VAT, the New York sales tax only applies to the final consumer of the product. Individuals and businesses who want to buy products for resale, improvement, or raw materials can use a New York Sales Tax Exemption Form to get them tax-free.
Companies or individuals who intend to make a tax-free qualifying purchase must obtain a New York state sales tax exemption certificate from the New York Department of Taxation and Finance. Exemption Certificate holders may submit a completed New York Sales Tax Exemption Form to the merchant instead of paying sales tax when making an exempt purchase.
New York Sales Tax Rates by City
| Sales Tax in New York Counties | |||
| County | State Rate | County/City Rate | Total Sales Tax |
| Albany | 4% | 4% | 8% |
| Allegany | 4% | 4.5% | 8.5% |
| Bronx | 4% | 4.875% | 8.875% |
| Broome | 4% | 4% | 8% |
| Cattaraugus | 4% | 4% | 8% |
| Cayuga | 4% | 4% | 8% |
| Chautauqua | 4% | 4% | 8% |
| Chemung | 4% | 4% | 8% |
| Chenango | 4% | 4% | 8% |
| Clinton | 4% | 4% | 8% |
| Columbia | 4% | 4% | 8% |
| Cortland | 4% | 4% | 8% |
| Delaware | 4% | 4% | 8% |
| Dutchess | 4% | 4.125% | 8.125% |
| Erie | 4% | 4.75% | 8.75% |
| Essex | 4% | 4% | 8% |
| Franklin | 4% | 4% | 8% |
| Fulton | 4% | 4% | 8% |
| Genesee | 4% | 4% | 8% |
| Greene | 4% | 4% | 8% |
| Hamilton | 4% | 4% | 8% |
| Herkimer | 4% | 4.25% | 8.25% |
| Jefferson | 4% | 4% | 8% |
| Kings (Brooklyn) | 4% | 4.875% | 8.875% |
| Lewis | 4% | 4% | 8% |
| Livingston | 4% | 4% | 8% |
| Madison | 4% | 4% | 8% |
| Monroe | 4% | 4% | 8% |
| Montgomery | 4% | 4% | 8% |
| Nassau | 4% | 4.625% | 8.625% |
| New York (Manhattan) | 4% | 4.875% | 8.875% |
| Niagara | 4% | 4% | 8% |
| Oneida | 4% | 4.75% | 8.75% |
| Onondaga | 4% | 4% | 8% |
| Ontario | 4% | 3.5% | 7.5% |
| Orange | 4% | 4.125% | 8.125% |
| Orleans | 4% | 4% | 8% |
| Oswego | 4% | 4% | 8% |
| Otsego | 4% | 4% | 8% |
| Putnam | 4% | 4.375% | 8.375% |
| Queens | 4% | 4.875% | 8.875% |
| Rensselaer | 4% | 4% | 8% |
| Richmond (Staten Island) | 4% | 4.875% | 8.875% |
| Rockland | 4% | 4.375% | 8.375% |
| Saratoga | 4% | 3% | 7% |
| Schenectady | 4% | 4% | 8% |
| Schoharie | 4% | 4% | 8% |
| Schuyler | 4% | 4% | 8% |
| Seneca | 4% | 4% | 8% |
| Steuben | 4% | 4% | 8% |
| Suffolk | 4% | 4.625% | 8.625% |
| Sullivan | 4% | 4% | 8% |
| Tioga | 4% | 4% | 8% |
| Tompkins | 4% | 4% | 8% |
| Ulster | 4% | 4% | 8% |
| Warren | 4% | 3% | 7% |
| Washington | 4% | 3% | 7% |
| Wayne | 4% | 4% | 8% |
| Westchester | 4% | 4.375% | 8.375% |
| Wyoming | 4% | 4% | 8% |
| Yates | 4% | 4% | 8% |
New York City Sales Tax
In addition to the state sales tax, New York City imposes a 4.5% sales tax. Because it is within the MCTD, the city also collects a 0.375% tax. In New York City, the total sales tax is 8.875%. This is the state’s highest rate. With such a hefty sales tax, it’s no surprise that living in New York City is so expensive.
Taxable Services in New York City
New York City collects sales tax for services that are not taxed by the state. Services such as beauticians, barbers, tanning, and massage therapists are examples. The city also levies sales tax on health and fitness clubs, gymnasiums, saunas, and other similar establishments. If you’re seeking to enhance your credit, keep in mind that most credit reporting services in New York City are subject to sales tax.
How To Calculate The New York Sales Tax
Use this easy formula to calculate the amount of sales tax to charge in New York City:
Sales tax = total sale amount x sales tax rate (in this case, 8%).
Are Pensions Or Retirement Income Taxed In New York?
Yes, money from pensions, 401(k), 403(b), and IRAs is combined and taxed as normal income. Tax rates range from 4% to 10.9 percent, same as for other types of income.
However, federal and New York state pensions, as well as military retirement pay, are tax-free.
The first $20,000 of retirement income (from a company pension, an IRA, a 401(k) account, or another retirement plan) is tax-free for persons aged 5912 or older. Married couples benefit from a double exemption (each spouse is entitled for the $20,000 exclusion), for a total exemption of $40,000.
What about investment earnings?
Capital gains from investments (including revenues from property sales) are taxed at the same rates as ordinary personal income after an initial exemption.
Is Social Security income taxed in New York?
No, however depending on your income, you may be required to pay federal taxes on a portion of your Social Security benefits. If you file an individual tax return and make between $25,000 and $34,000 in total income, or if you file jointly and make $32,000 to $44,000 in total income, up to 50% of your benefits will be taxed. Furthermore, if your total income exceeds $34,000 for a person or $44,000 for a couple, the federal government will tax up to 85 percent of your benefits.
How Is Property Taxed in New York?
Property tax in New York is a local tax levied on the value of your home as determined by the state. According to the Tax Foundation, the average rate is 1.4 percent of the assessed value of your home.
Property taxes vary greatly across the state, depending on county and municipality.
Will I my heirs have to pay New York inheritance and estate tax?
In New York, there is no inheritance tax, although estates are taxed at rates ranging from 5% to 16% after the existing exemption of $6,110,000. In exceptional situations, estates may face extremely high taxes, termed as the “tax cliff,” which may result in the estate paying a tax of more than 100%.
Taxpayers can avoid the cliff by bequeathing to charity assets worth more than the state’s exemption level.
Is Military Pay Taxed in New York?
Military pensions are not taxed in New York. If you live in the state, your active-duty pay is taxed like regular income. You are deemed a nonresident if you were not a full-time New Yorker when you joined the military but were given service in the state. As a result, your military pay is tax-free in New York.
Under the federal Servicemembers Civil Relief Act, military spouses may be entitled to certain tax benefits, including income tax exemption and the option to utilize the same state of residency as the service member.
Which States do not Have a Sales Tax?
Alaska, Delaware, Montana, New Hampshire, and Oregon are the only states without a broad statewide sales tax. These are known as the NOMAD states (“N” for New Hampshire, “O” for Oregon, and so on).
Which States Have the Lowest Property Taxes?
Hawaii has the lowest property tax rate in the country. However, due to the high cost of living and restricted housing options, it is an extremely costly area to live.
In Conclusion,
New York State’s tax rate is under 4%. Each county or city in the state, however, imposes its own sales tax. Some counties additionally include a transportation fee in their sales tax. As a result, in New York, you may anticipate to pay between 7% and 8.875% in sales tax. At 8.875%, New York City has the highest tax rate in the state. Groceries and apparel or footwear costing less than $110 are commonly free from sales tax. However, New York City has its own set of rules. It levies a sales tax on some services that are not taxed by the state.
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