The Clothing Tax Exemption Rule.
The availability of clothing and footwear below $110 dollars and exempt from sales tax is a policy by the New York State Government. In NYC too, the policy is in place and no state and local government tax is levied. Presumably, the idea is to encourage people to buy necessities of life which are essential, particularly for the people who have a large family and need to spend a lion’s share of their budget on clothing.
Why $110?
The $110 mark is associated with a threshold which is not limited to transaction. In buying two shirts which cost $90 each, you clear two tax-free. Now, if someone is buying a single jacket which costs $150, that jacket will be taxed at 8.875% in NYC. Rules like this help ensure that practitioners who provide basic and essential items for people, are not also charged for basic comforts.
Policy Reasoning
The exemption was created to ease the burden of the cost of living for lower and middle-income households. It was also aimed at streamlining the purchasing process for clothing for these demographics. The purchase of clothing is necessary for living and taxing it at high city rates would severely burden residents.
Does It Apply Everywhere in NY?
Not every county in New York opts for this exemption. While NYC fully participates, some counties charge local tax on clothing even at less than $110. If you are shopping outside the five boroughs, bear in mind the local tax rules.
Bottom Line
The clothing exemption in NYC is a friendly policy aimed at reducing the burden of spending on necessities. The next time you are shopping in the city, bear in mind the exemption rule, you could save some money.
If you would like to understand NYC sales tax rules better, reach out to us today. Our dedicated team at Dimov NYC CPA stands ready for expert assistance on exemptions and compliance for your business or personal taxes.
