How to handle sales tax on clothing: A state-by-state guide

Americans spend billions on apparel every year, and increasingly, they spend it online. Since most states now require many out-of-state businesses to collect and remit sales tax, ecommerce sellers need to know which states tax sales of clothing and footwear, and where such sales are exempt.

Forty-five states tax most sales of tangible personal property (TPP), which California sales and use tax law defines as “personal property which may be seen, weighed, measured, felt, or touched, or which is in any other manner perceptible to the sense.” Unless we’re talking about the emperor’s new clothes, apparel certainly qualifies as TPP, so one might assume clothing is always subject to sales tax in all 45 states.

It’s not.

Clothing is entirely exempt from sales tax in four states and exempt (or partially exempt) under certain circumstances in eight states.

Approximately 15 states (the exact number varies from year to year) provide an exemption for many — but not all — articles of clothing and footwear during specific, limited periods, known as sales tax holidays or tax-free periods. At such times, retailers must not collect tax on certain sales of taxable clothing.

Read on for more details.

States where clothing is sales tax exempt

Clothing is exempt in the following states, all of which don’t have a general sales tax.

• Delaware
• Montana
• New Hampshire
• Oregon

States where some clothing is exempt, and some is taxable

Alaska

There’s no general, statewide sales tax in Alaska, but more than 100 local governments levy local sales taxes. Thus, apparel is subject to local sales tax in many parts of the Last Frontier, including the Kenai Peninsula Borough and Nome.

Massachusetts

Clothing and footwear priced $175 or less per item/pair are generally exempt from Massachusetts sales tax use tax. Sales tax applies to any individual clothing item or pair of shoes priced above $175.

Apparel designed solely for athletic or protective use is taxable no matter the sales price. Examples of taxable apparel include athletic uniforms, bowling shoes, and cleated athletic shoes. Accessories such as hair notions, handbags, and jewelry are also subject to sales tax.

Minnesota

Clothing is generally exempt from Minnesota sales and use tax, but the following products are generally taxable:

• Clothing accessories
• Fur clothing
• Protective clothing
• Sports or recreational equipment

New Jersey

Most articles of clothing and footwear designed for human use are exempt from New Jersey sales and use tax. Exceptions to that rule include the following items, which are subject to sales tax:

• Accessories
• Equipment
• Fur clothing
• Protective equipment
• Sport or recreational equipment

New York

New York is tricky. State sales tax doesn’t apply to most clothing and footwear sold (for human use) for less than $110 per item or pair, while clothing priced $110 or higher is taxable. The exemption extends to items used to make or repair exempt clothing and footwear.

State sales tax also doesn’t apply to the following:

• Athletic equipment and protective devices
• Costumes or rented formal wear
• Items made from jewels, metals, pearls, or precious or semi-precious stones that are used to make or repair exempt apparel
• Items used to make or repair taxable apparel

Apparel exempt from state sales tax is also exempt from local sales tax in certain (but not all!) parts of New York. As of February 2020, only the following jurisdictions provide for this exemption:

• Chautauqua County
• Chenango County (outside the city of Norwich)
• Columbia County
• Delaware County
• Greene County
• Hamilton County
• Tioga County
• Wayne County
• New York City

Pennsylvania

Although most apparel is exempt from Pennsylvania sales and use tax, the following products are subject to sales tax:

• Articles made from real, imitation, or synthetic fur, “where the fur is more than three times the value of the next most valuable component material”
• Formal day or evening apparel
• Sporting apparel and goods

Rhode Island

Clothing and footwear “intended to be worn or carried on or about the human body” are generally exempt from Rhode Island sales and use tax if “suitable for general use.” However, the exemption is capped at $250.

Unlike in New York, where crossing the $110 threshold transforms an item from entirely exempt to entirely taxable, Rhode Island sales and use tax applies only to the amount above the $250 cap. For example, if a sweater costs $275, sales tax applies only to $25.

Additionally, accessories such as belt buckles, briefcases, hair notions, handbags, and jewelry are taxable. The following items are also taxable:

• Costume masks when sold separately
• Protective equipment
• Sport or recreational equipment

Vermont

Most clothing and footwear sales are exempt from Vermont sales and use tax. Exceptions include clothing accessories and equipment, protective equipment, and recreational or sport equipment.

*Connecticut imposes a 7.75% luxury tax on sales of apparel, handbags, luggage, umbrellas, wallets, or watches with a sales price exceeding $1,000

The following states provide a sales tax holiday for specified clothing and footwear (as of February 2020):

Each state has specific rules regarding sales tax holidays (e.g., some exempt all clothing, some only exempt clothing below a certain price point). Furthermore, sales tax holidays are subject to change. For more details, see 2020 sales tax holidays.

If you sell clothing in multiple states, be sure you know where and how to tax it. Automating sales tax collection helps.