New York sales tax guide: rates, exemptions, filing

Published Wednesday 15 April 2026

Table of contents

• How much is sales tax in New York?
• New York sales tax rate by county
• How to register for New York sales tax
• How to calculate New York sales tax
• Filing and paying New York sales tax
• Sales tax compliance best practices
• Sales tax exemptions in New York
• Use tax vs. sales tax in New York
• Online sales tax rules for New York businesses
• Simplify New York sales tax with Xero
• FAQs on New York sales tax

Key takeaways

• Calculate New York sales tax by adding the 4% state rate to local taxes, which results in total rates ranging from 7%–8.875% depending on where your customer receives the item.
• Register for a Certificate of Authority through the New York State Department of Taxation and Finance before collecting any sales tax, then file returns at your assigned frequency—monthly, quarterly, or annually—even if you had no taxable sales that period.
• Recognize that clothing and footwear under $110 per item is exempt from the 4% state tax, and most professional services such as consulting, legal, and accounting work are not taxable in New York.
• Collect sales tax based on your customer's delivery address, not your business location, and register to collect New York sales tax if you exceed $500,000 in sales or 100 transactions with New York customers in a year—even if your business is based outside the state.

How much is sales tax in New York?

New York sales tax ranges from 7%–8.875%, depending on where you make the sale. Sales tax accounts for one-third of states' total tax collections on average.

The state charges a flat 4% rate, and local governments add 3%–4.875% on top.

New York City has the highest rate at 8.875%, which includes:

• State tax: 4%
• City tax: 4.5%
• MCTD surcharge: 0.375% for the Metropolitan Commuter Transportation District

The MCTD surcharge applies to New York City and surrounding counties, including Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester.

Example: If you sell a $100 item in Brooklyn, you collect $8.88 in sales tax. The customer pays $108.88 total.

Check the New York Department of Taxation and Finance's sales tax rate tables for current rates, or use a New York sales tax calculator for accurate estimates.

New York sales tax rate by county

County sales tax rates in New York combine the 4% state rate with local taxes that vary by location. Here are current rates for major counties:

• New York County (Manhattan): 8.875%
• Kings County (Brooklyn): 8.875%
• Queens County: 8.875%
• Bronx County: 8.875%
• Nassau County: 8.25%
• Suffolk County: 8.625%
• Westchester County: 8.375%

Tax rates change often. Check the official rate tables for the latest rates in your area.

How to register for New York sales tax

A Certificate of Authority is required before you can legally collect sales tax in New York. This certificate authorizes your business to collect and remit tax to the state.

To register:

1. Visit New York Business Express online.
2. Complete the sales tax vendor registration.
3. Receive your Certificate of Authority.
4. Note your assigned filing frequency (monthly, quarterly, or annually).

How to calculate New York sales tax

To calculate New York sales tax, combine the state, local, and Metropolitan Commuter Transportation District (MCTD) rates. See how to calculate sales tax for more details.

Purchase price × Total tax rate = Sales tax owed

Where total tax rate = State rate (4%) + Local rate + MCTD rate (if applicable)

If you sell a $200 item in Manhattan, you'll collect $17.75 in sales tax.

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

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

You must charge sales tax based on where your customer receives the item, not where your business is located. For online sales, calculate the local tax rate for the delivery address. The 2018 Supreme Court decision in South Dakota v. Wayfair means you may need to collect New York sales tax even if your business is outside the state.

Need help calculating sales tax in New York?

Use the New York Department of Taxation and Finance rate tables to find location-specific rates and stay compliant with local and state rules.

Filing and paying New York sales tax

Filing sales tax returns is required at the frequency New York assigns you, whether monthly, quarterly, or annually. You must file a return for every period, even if you had no taxable sales.

Key filing requirements:

• Filing frequency: based on your sales volume (monthly, quarterly, or annually)
• Zero returns: required even when you have no sales to report
• Payment method: file and pay online through your state account
• Deadline compliance: on-time filing avoids penalties and keeps your business in good standing

Sales tax compliance best practices

Staying compliant with New York sales tax helps you avoid penalties and keeps your business running smoothly. Here are key practices to follow.

Avoid common mistakes

Watch out for these frequent errors that can lead to penalties:

• Charging the wrong rate for the customer's location
• Missing filing deadlines, even for zero-sales periods
• Failing to collect exemption certificates before tax-exempt sales
• Mixing personal and business transactions

Keep organized records

Maintain thorough documentation to support your filings:

• Store all sales receipts, invoices, and exemption certificates
• Track taxable vs. exempt sales separately
• Document the tax rate applied to each transaction
• Back up records digitally for easy retrieval

Prepare for audits

Take these steps to be ready if the state reviews your records:

• Reconcile sales tax collected with amounts reported on returns
• Review exemption certificates annually to confirm they're current
• Keep records accessible for at least three years
• Consider working with an accountant familiar with New York tax rules

Use automation to reduce errors

Technology can help you stay accurate and save time:

• Connect your point-of-sale system to tax calculation software
• Set up automatic rate updates for location-based changes
• Use accounting software like Xero to track sales and generate reports

Sales tax exemptions in New York

Sales tax exemptions remove the tax requirement from certain purchases, which can lower your business costs. Whether an exemption applies depends on:

• Item type: specific goods like clothing under $110
• Buyer status: nonprofits and government entities
• Transaction purpose: resale or manufacturing use

What's taxable and what's exempt

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

• Taxable: Most tangible personal property, prepared food, certain services like repairs and installations
• Exempt: Most groceries, prescription drugs, certain medical supplies, clothing and footwear under $110 per item

Common business exemptions

Common business exemptions include:

• Clothing under $110: exempt from the 4% state tax, though local taxes may still apply
• Professional services: consulting, legal, and accounting services are not taxable, except for installation, repair, or tangible property services
• Nonprofit purchases: 501(c)(3) organizations with proper documentation pay no sales tax

Tax-exempt documents

Tax-exempt organizations must collect and keep the right exemption certificates. Here are the forms you need:

• Form ST-119.1 (Exempt Organization Certificate): certifies that qualified nonprofits can make purchases exempt from New York sales tax
• Form ST-120 (Resale Certificate): for businesses purchasing items they intend to resell
• Form ST-121 (Exempt Use Certificate): applies when businesses purchase items for tax-exempt purposes, such as manufacturing equipment or resale inventory

Request the right form from your customer to confirm and document the exempt sale.

Use tax vs. sales tax in New York

Use tax is a companion to sales tax that applies when no sales tax was collected at purchase. Both taxes serve different collection purposes:

• Sales tax: collected from customers at the time of purchase
• Use tax: paid by customers when no sales tax was collected, such as on out-of-state purchases

If you buy from an out-of-state seller who doesn't collect New York sales tax, you owe use tax on that purchase. Businesses registered for New York sales tax generally report use tax on their sales tax returns. Individuals may report unpaid use tax on their New York State income tax return or directly to the Tax Department.

Online sales tax rules for New York businesses

Online sellers must collect New York sales tax from customers regardless of where the business is located. This destination-based rule means you charge tax based on the customer's delivery address, not your business location.

Most states with sales tax follow similar rules, as all 45 states with a statewide sales tax have adopted requirements for remote sellers based on economic presence.

Key triggers for tax collection

You must register and collect sales tax in New York when you meet either of these thresholds:

• Sales threshold: more than $500,000 in New York sales during the previous four quarters
• Transaction threshold: more than 100 transactions with New York customers during the previous four quarters

You may also need to collect if you have a physical presence in New York, such as a store, office, warehouse, or employees. If you sell through a marketplace platform like Amazon or Etsy, the platform may collect and remit tax on your behalf, contributing to the billions collected nationally from marketplace sales.

What your online business must do to comply

To stay compliant with New York sales tax, follow these steps:

1. Register for your Certificate of Authority: Apply through the New York State Department of Taxation and Finance before making any taxable sales.
2. Collect the correct tax rate: Charge based on the customer's delivery address, including state and local taxes.
3. File returns on schedule: Submit at your assigned frequency (monthly, quarterly, or annually), even for periods with no taxable sales.
4. Keep records for three years: Store documentation of all taxable and exempt sales, returns, and collected taxes for audit purposes.

Rules for shipping and digital products

Here's how New York taxes shipping and digital products:

• Shipping charges: taxable unless itemized separately on the invoice
• Digital downloads: eBooks, music, and online courses are generally exempt
• Prewritten software: taxable whether downloaded or accessed in the cloud
• Custom software: may be exempt depending on delivery method and use

If you sell software as a service or subscriptions, review the specific rules or consult a tax professional.

Simplify New York sales tax with Xero

Streamline your sales tax compliance to focus more on running your business. Xero simplifies the process by helping you track sales, expenses, and tax obligations in one place.

With Xero, you can:

• track taxable and exempt sales automatically
• connect with sales tax automation apps like Avalara for accurate rate calculations
• keep organized records for filing and audits
• focus on growth while your compliance stays on track

Try Xero free for one month.

FAQs on New York sales tax

Here are answers to common questions about New York sales tax compliance.

Is New York State sales tax 8%?

No, New York State sales tax is not a flat 8%. The state rate is 4%, but local areas add their own taxes, creating combined rates from 7%–8.875%. In New York City, the total rate is 8.875% (4% state + 4.5% city + 0.375% MCTD surcharge).

What items are not taxed in New York?

Items exempt from New York sales tax include:

• most groceries and unprepared food
• prescription drugs and medical equipment
• clothing and footwear under $110 (exempt from state tax; local taxes may still apply)

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

Most services are not taxable in New York. Consulting, legal, and accounting services are exempt. Only specific services like repairs, installations, and data processing are subject to sales tax.

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

Sales tax is generally not deductible for businesses unless the purchase qualifies for resale or exempt use.

Key points:

• For businesses: use Form ST-120 (Resale Certificate) to avoid paying tax on inventory purchases, or Form ST-121 (Exempt Use Certificate) for qualified exempt uses
• For individuals: the IRS caps the state and local tax deduction at $10,000, which includes sales tax

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

Yes, the same sales tax rates apply to both in-store and online purchases. The difference is how you determine which rate to charge:

• Physical stores: charge tax based on your store's location
• Online sales: charge tax based on the customer's delivery address

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

Keep these records for at least three years:

• all taxable and exempt sales transactions
• sales tax collected from customers
• exemption certificates received from buyers
• filed sales tax returns and payment confirmations