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New York Sales Tax Exemptions

  • Feb 24, 2016 | Jessica Sillers

It’s easy to get around Manhattan. Avenues run north and south, and streets go east and west. Unfortunately, sales tax in the Empire State isn’t as easy to navigate. Read on to get your business in a New York state of mind.

The Basics

Many sales tax–free goods you’ll come across in New York are basic staples. Exemptions include most foods meant to be eaten at home, drugs and medicines, utilities like water and gas, laundry services, and newspapers. A few business basics are exempt, too, like promotional materials and items meant for resale.

Sales tax on clothing in New York is notoriously complicated. The law says that clothes and footwear are exempt if they cost less than $110 and are meant for people (sorry, Rover), with a few additional stipulations. That $80 sweater for a New York winter? Sales tax free. The formal gown you rented for a night at the opera? Add 4 percent state sales tax to the price tag (plus an additional 4.5 percent city sales tax if you get it in NYC).

Who’s on First?

Sometimes sales tax exemptions are a matter of who, not what. Some companies and organizations are eligible for tax-exempt status for most purchases. Religious and charitable groups, often known as section 501(c)(3) organizations, are a good example. Tribally chartered corporations on qualified Indian reservations may also be exempt.

Some working animals get a sales tax break, too. Service dogs are exempt, along with the goods and services needed to care for them. This includes dog treats for a job well done!

Sellers are responsible for keeping records of exemption certificates. Make sure you have a system in place to associate a tax-exempt order with a valid certificate. Form of payment is also important. In New York, purchases have to be paid with the tax-exempt organization’s funds to qualify for the exemption. If employees use their personal money, even if they’ll be reimbursed later, sales tax still applies.

Sales Tax Special Attractions

Tourist guides are only one way to learn about popular attractions. If you really want to discover the state’s pride and joy, take a look at what gets a pass on sales tax.

Whether the curtain rises on Broadway, at Ithaca College, or in a rural playhouse by the Finger Lakes, theater lovers know the show must go on. New York says “break a leg” by offering exemptions for products or services needed for a stage production. Whether you love drama or musical arts, this exemption deserves some applause.

Broadway isn’t the only show in town. New York is home to the Belmont Stakes, the final leg of the Triple Crown of horse racing. It’s no wonder that racehorses are sales tax–free. Purchases for a commercial horse boarding operation are exempt, too. After all, when they’re not channeling their inner Secretariat, New York horses need a place to relax and dream of the next big race.

Want to learn more? Take a look at our New York sales tax guide.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jessica Sillers
Avalara Author Jessica Sillers