What is the Sales and Use Tax in NY State?

The New York State sales tax applies to most tangible goods and certain services purchased within the state, including items like electronics, clothing over certain amounts, furniture, and some repair or installation services. As of 2025, the statewide base rate is 4%, but local counties and cities can add their own sales taxes, resulting in a total combined rate of up to 8.875% in some areas, such as New York City.

Retailers are legally responsible for collecting sales tax from customers at the point of sale and remitting it to the New York State Department of Taxation and Finance. Businesses must also track taxable versus exempt items and ensure proper reporting to avoid fines or audits.

The use tax is a tax that goes hand in hand with sales tax. It is for people who willingly and knowingly purchase taxable goods outside New York and then bring those goods into New York and use and/or store them within New York. It equalizes tax consequences on purchases made from within and outside New York and stops businesses and consumers from avoiding taxes by making purchases in other states.

Example: If you are a New York resident and purchase office equipment from an out-of-state vendor with no New York sales tax charged, you owe New York use tax on that transaction. Businesses are supposed to self-report use tax, while New York residents may have an obligation to report and pay use tax on certain purchases made over the internet or by mail.

There is little risk of incurring use tax liabilities, and consumers and businesses can more easily budget for expenses, if there is an understanding of both the sales tax and use tax.

Who Must Pay Sales and Use Tax

• Consumers pay the tax at the time of purchase.
• Businesses must collect sales tax on taxable items and report it to the New York State Department of Taxation and Finance.
• Businesses that make taxable purchases from out-of-state vendors must also self-assess and remit use tax.

Not all purchases in New York are subject to sales or use tax. Certain items are exempt, meaning buyers do not have to pay tax on them. Common exemptions include:

• Most groceries such as fresh produce, bread, and dairy products
• Prescription medications and some over-the-counter drugs
• Clothing and footwear under $110 per item
• Medical equipment in certain cases
• Purchases by nonprofit organizations, government agencies, and other tax-exempt entities

Businesses can also apply for a resale certificate if they intend to sell goods to customers without collecting sales tax. This allows for tax-free purchases of items that will be resold, preventing double taxation.

Special cases may include temporary exemptions, such as sales tax holidays or exemptions for specific events, which businesses and consumers should monitor to take advantage of tax-saving opportunities.

Businesses in New York must file sales and use tax returns based on the volume of their taxable sales:

• Monthly for large-volume sellers
• Quarterly for medium-volume sellers
• Annually for small-volume sellers

Proper filing ensures that taxes collected from customers are remitted to the state on time. Failing to collect, report, or pay sales or use tax can result in penalties, interest charges, or audits by the New York State Department of Taxation and Finance.

Understanding New York’s sales and use tax rules is essential for both consumers and business owners. Consumers benefit by knowing which purchases are taxable, which are exempt, and when they may owe use tax on out-of-state purchases. Businesses benefit by ensuring proper tax collection, avoiding costly penalties, and maintaining accurate records for compliance and financial planning.