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.<\/p>
When reading about sales tax in New York, you’ll come across the term “Sales and Use Tax.” <\/p>
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.<\/p>
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.<\/p>
The sales tax in New York can range from 7% to 8.875%, with most counties and cities collecting an additional 8%.<\/p>
The state sales tax rate in New York is 4%, and the average NY sales tax after municipal surtaxes is 8.48%.<\/p>
The New York sales tax does not apply to groceries, prescription pharmaceuticals, or non-prescription drugs.<\/p>
Counties and localities can levy an extra 4.875% local sales tax, for a total combined sales tax of 8.875%.<\/p>
In addition to the state sales tax, New York has 2158 special sales tax jurisdictions with municipal sales taxes.<\/p>
New York’s state sales tax is lower than that of 86.5% of states.<\/p>
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.<\/p>
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.<\/p>
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.<\/p>
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.<\/p>
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.<\/p>
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.<\/p>
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.<\/p>
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.<\/p>