Calculating New York Sales Tax

Published on Monday 2 June 2025

Table of contents:

• How much is sales tax in New York?
• New York sales tax rates by county
• How to calculate New York sales tax
• Sales tax exemptions in New York
• Online sales tax rules for New York businesses
• Use tax vs. sales tax in New York
• FAQs about New York sales tax

How much is sales tax in New York?

New York sales tax starts at a base rate of 4%, with many counties and cities adding their own local taxes that vary by location. Overall, combined tax rates in New York can range from 7% to 8.875%, with the highest tax rate in New York City. Businesses operating in NYC can expect a combined tax rate of 8.875% that breaks down into separate, local surcharges, including:

• The 4% state tax
• A 4.5% city tax
• A 0.375% tax for the Metropolitan Commuter Transportation District (MCTD)

The MCTD tax actually applies to both the city and its surrounding counties, including Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester.

So if a customer buys an item for $100 in Brooklyn, they’ll pay $8.88 in sales tax for a total purchase price of $108.88.

You can find the most up-to-date tax rates via the NY Department of Taxation and Finance and use a sales tax calculator for New York for accurate estimates.

New York sales tax rate by county

Although the New York sales tax rate is 4%, most counties add local taxes that impact the total rate applying to businesses in the state. Here’s a breakdown of the sales tax rates for some of the most populated areas in New York:

Tax rates can frequently change, so check the official rate tables for updates to local taxes that may be applicable to your business.

How to calculate New York sales tax

To calculate New York sales tax, you need to combine the 4% state rate, any applicable local count or city rates, and the MCTD surcharge if it applies. Here’s a simple formula to use:

Purchase price x (state rate + local rate + MCTD rate) = sales tax total

Suppose a customer buys a $200 item in Manhattan. Because of the location, the total sales tax would be $17.75, where:

• Total tax rate = 8.875% = (4% state rate + 4.5% county rate + 0.375% MCTD tax)
• $200 x 0.08875 = $17.75 in sales tax

The customer’s total cost would then be $217.75.

Additionally, the correct rate is based on where the buyer receives the item and not where the seller is located. When it comes to remote or online sales, out-of-state sellers will still need to calculate the New York local tax rates for the delivery destination.

Need help calculating sales tax in New York?

Use Avalara’s New York state tax calculator to get location-specific rates and ensure your business is compliant with local and state regulations.

Sales tax exemptions in New York

Not all goods and services are taxable. There are New York tax exemptions that may apply based on the item, buyer, or the specific type of sale (such as buying something for resale).

What’s taxable and what’s exempt:

Here are some examples of taxable and exempt items and services:

Common business exemptions

Some purchases and transactions are exempt from business sales tax in New York, which can help reduce the amount of taxes you pay. Some common exemptions can include:

Clothing and footwear under $110: If the item is under $110, then it’s exempt from the 4% state sales tax. However, local jurisdictions may still impose their own tax for these items.

Service transactions: Most services aren’t taxable in New York unless they involve selling, repairing, or installing tangible personal property. An example would be an auto repair where the labor isn’t taxable but the replacement parts are.

Sales to tax-exempt organizations: These include organizations such as 501(c)(3) nonprofits that are exempt if the organization has valid proof of exemption. Nonprofit businesses must keep the appropriate documentation for audit purposes.

Tax-exempt documents

Organizations that are tax-exempt, such as nonprofits, must collect and retain proper exemption certifications to qualify for tax-exempt sales:

• Form ST-119.1: This is the Exempt Organization Certificate for qualified nonprofits. This certifies that purchases are exempt from New York sales tax.
• Form ST-121: This is the Exempt Use Certificate, which applies when businesses purchase items for a tax-exempt use, like manufacturing equipment or buying items for resale.

As a seller, request the appropriate form to confirm and document the exempt sale.

Online sales tax rules for New York businesses

Online sales tax in New York applies to both in-state and remote sellers, which businesses must collect based on customer location. In New York, there are key triggers that take effect and require the collection of state sales tax.

Key triggers for tax collection

What your online business must do to comply

If you sell products to customers in New York, you’re likely responsible for collecting and remitting New York sales tax. To stay compliant, your business must follow a few important steps:

1. Register for a New York sales tax certificate. Before you can make any taxable sales, you’ll need to apply for a Certificate of Authority from the New York State Department of Taxation and Finance. This certification allows you to collect sales tax legally.
2. Collect the correct tax rate per shipping address. In New York, online sales are destination-based, so you must charge sales tax based on where the product is delivered and not where your business is located. This includes the state rate and any applicable local taxes.
3. File sales tax returns at the proper filing frequency. After you register for your certificate, you’ll be assigned a filing frequency based on your expected sales volume – monthly, quarterly or yearly. You’ll need to file promptly each time, even if you don’t have any taxable sales for the period.
4. Keep records of everything for at least three years. New York requires businesses to keep records of all taxable and exempt sales, returns, and collected taxes in case of an audit.

Rules for shipping and digital products

In New York, shipping charges are generally taxable if they’re not separately stated on the invoice. You can avoid unnecessary taxation by itemizing shipping fees separately from product costs.

Digital items such as eBooks, downloaded music, and online courses are usually exempt from New York sales tax. But there’s an important exception: prewritten software is usually taxable, whether it’s downloaded or accessed in the cloud – even if there’s no physical copy.

Similarly, custom software and services may be exempt, depending on how it is delivered and used. Businesses selling SaaS or software subscriptions should review the definitions closely or consult a tax professional.

Use tax vs. sales tax in New York

It’s important to distinguish between sales and use tax in New York, especially for businesses. With sales tax, you’re collecting the tax directly from customers at the time of the purchase.

However, use tax is paid by customers when sales taxes aren’t collected during the transaction, such as for online or out-of-state sales. Here’s a brief overview of how use tax and sales tax differ:

If you buy something from out-of-state sellers that don’t collect sales tax, then you’re responsible for paying use tax. As a business, you must report this on your tax returns to stay compliant.

FAQs about New York sales tax

1. Do I need to charge New York sales tax if I sell services instead of physical products?

Only specific services are taxable, such as repairs, installations, and data processing. Most professional services like consulting, legal work, and accounting are exempt.

2. Is sales tax in NY the same for in-store and online purchases?

Yes. Sales tax applies based on where the customer receives the item, whether they purchase it in person or have it shipped. Physical sellers must charge the state and any local tax based on where their physical location is, while online sellers must charge state and local tax based on where the purchase is being delivered to.

3. Can I deduct sales tax on business purchases in New York?

Generally, no. Sales tax isn’t usually deductible unless it qualifies as a resale or for exempt usage. You can use Form ST-120 – a Resale Certificate – to avoid paying tax on qualifying purchases, or Form ST-121 – an Exempt Use Certificate – if you’re a qualified nonprofit organization.

4. What records should I keep to stay compliant with state and local rules?

Make sure you keep detailed records of all taxable and exempt sales, all taxes your business collects, any exemption forms, and your filed returns. Be sure to keep these records for at least three years.

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