Non-taxable merchandise refers to items that are exempt from New York State sales and use tax. When you purchase these items, you do not pay the sales tax that normally applies to most goods and some services. These exemptions are designed to reduce the tax burden on essential items, encourage economic activity, and support certain organizations.
Not all products are taxed equally, and knowing which items are non-taxable can help both consumers and businesses avoid unnecessary costs.
Common Non-Taxable Items
New York exempts a variety of merchandise from sales and use tax. Common examples include:
- Groceries: Most food and beverages intended for home consumption, such as fruits, vegetables, dairy, bread, and cereals, are exempt.
- Prescription medications: Prescription drugs are generally non-taxable, and some over-the-counter medications may also qualify.
- Clothing and footwear under $110 per item: Items priced below this threshold are usually exempt from sales tax.
- Medical equipment: Certain medical devices or durable medical equipment may be exempt for patients or healthcare providers.
- Purchases by nonprofits or government agencies: Qualified organizations can buy items tax-free using valid exemption certificates.
Tip: Some temporary exemptions, like sales tax holidays, may also apply for specific items or events, such as school supplies or clothing during designated periods.
Why Knowing Non-Taxable Merchandise Matters
Understanding what is non-taxable is essential for consumers and businesses alike. Consumers can save money by being aware of exemptions, while businesses must correctly identify exempt items to avoid overcharging customers or facing penalties.
Businesses that sell non-taxable merchandise must maintain accurate records and may need to issue resale or exemption certificates to comply with state regulations. Misclassifying taxable and non-taxable items can result in audits, fines, and interest charges.
How to Confirm Exempt Items
To ensure compliance, always check the New York State Department of Taxation and Finance guidelines, which provide detailed lists of non-taxable items. Businesses and consumers should also retain documentation for purchases claimed as exempt to prevent issues during tax reporting or audits.
Need help understanding which items are taxable or exempt in New York? Contact Dimov NYC CPA for expert guidance and compliance support.
