How to Calculate New York Sales Tax

Three Parts:Calculating New York Sales TaxCollecting New York Sales TaxDetermining Whether a Sale Is Taxable

The state of New York is one of 10 states that have special taxing districts within their borders. This makes it more complicated to calculate the sales tax owed on a given sale. However, doing so is simply a matter of following the right process. To calculate New York sales tax, you will need to figure out if the sale in question is taxable and then apply the appropriate state and local tax rates.

Part 1
Calculating New York Sales Tax

  1. Image titled Calculate New York Sales Tax Step 1
    Start with the basic New York sales tax rate. Since June 1, 2005, the New York state sales tax rate has been 4 percent. However, this only represents the portion of sales tax that goes to the state. Other city and county-specific rates are also tacked on to the overall sales rate. These additional rates depend on the location of the buyer.[1]
  2. Image titled Calculate New York Sales Tax Step 2
    Determine where in New York the purchased item or service will be delivered. New York's sales and use tax rates are determined by the location of the purchaser of the product or service, not where the product or service was issued from. Locate the city, county, and/or district of the customer so that you can use it to find the applicable tax rates.
    • Remember that items bought in New York but delivered to locations outside the state are not taxed.[2]
    • The New York State Department of Taxation and Finance has a jurisdiction and rate lookup website at Users enter the delivery address and ZIP Code to find the correct tax rate.
    • For example, if you are shipping to Schenectady, NY, you can use the lookup site to find that the appropriate local tax is for Erie County.
  3. Image titled Calculate New York Sales Tax Step 3
    Add in county or city-specific tax rates. County or city rates are assessed on top of the state-wide sales tax rate. County tax rates vary from 3 to 4.75 percent, with the appropriate county rate for where the purchaser lives added to the state rate. In addition, purchases within the Metropolitan Commuter Transportation District (MCTD) include an additional surtax of 0.375 percent. Add in the relevant city or county tax rate, and where applicable the MCTD rate, to determine the overall sales tax rate.[3]
    • Keep up with local sales tax rate changes by visiting
    • Continuing with the previous example, imagine that you are shipping an order to a customer in Schenectady, NY. You would charge them both the 4 percent NY state rate and an additional 4.75 Erie County rate, for a total rate of 8.75 percent.[4]
  4. Image titled Calculate New York Sales Tax Step 4
    Multiply the adjusted tax rate by the purchase amount. This determines the amount of tax owed. Make sure to incorporate the rules for tax-exempt and taxable items, such as those for discounts or shipping charges, when determining total sales tax owed on an order.

Part 2
Collecting New York Sales Tax

  1. Image titled Calculate New York Sales Tax Step 5
    Determine whether you have sales tax nexus in New York. Only those businesses with tax nexus in New York need to collect New York sales tax. Tax nexus is determine by the business's presence in the state. You have tax nexus if:
    • You have a storefront or office in the state.
    • You have an employee that spends more than two days in the state each year.
    • You store goods in a warehouse in the state.
    • The business owns property in the state.
    • If your business delivers in New York state using its own vehicles.
    • The business has contractors or representatives in the state.[5]
  2. Image titled Calculate New York Sales Tax Step 6
    Distinguish between New York sales tax and use tax. Sales tax and use tax are closely related, but there are differences.
    • Sales tax is assessed on tangible items and services sold within the state of New York. Sales tax is normally collected by the seller at the point of purchase, and the seller is responsible for reporting and paying it to the state.
    • Use tax is assessed on tangible items and services bought outside the state of New York but used within its borders. Use tax is usually reported and paid by the purchaser to the state.
    • For example, a business might owe a use tax on a taxable item purchased online and then shipped to New York from another state.
    • You might also owe use tax on taxable items that are assembled by your business. For example, if your business builds furniture and then uses that furniture for its office, you will be charged a use tax on that furniture.[6]
  3. Image titled Calculate New York Sales Tax Step 7
    Register for a sales tax permit. To collect New York sales tax, you will need a Certificate of Authority, which is a sales tax permit. This permit allows you to collect sales taxes from your customers on behalf of the state. Visit and use the license wizard to get started applying for the licenses your business needs.[7]
  4. Image titled Calculate New York Sales Tax Step 8
    File monthly tax returns. Vendors in New York are required to file monthly tax returns. The return for a given month is due on the 20th of the next month. For example, the tax return for November would be due by December 20th of the same year. You will also be responsible for quarterly and annual filings. Returns can be filed online with the New York Department of Taxation and Finance or through tax software.
    • A late fee of $50 will be assessed for late filings.
    • A vendor with a sales tax permit must file a return, even if no sales were made that month.[8]

Part 3
Determining Whether a Sale Is Taxable

  1. Image titled Calculate New York Sales Tax Step 9
    Check the list of exempted sales. The majority of sales are taxable under New York tax law. However, there are a number of key exceptions. For example, sales to federal or state government organizations and charitable organizations are exempt from taxation. The same is true for items meant for resale, food meant for home consumption, and medication. Other sales exempt from taxation include many services, such as property improvement, medical services, professional services, and education.[9]
  2. Image titled Calculate New York Sales Tax Step 10
    Ignore clothing and footwear items under $110. There is a specific tax law specifying that items of clothing or footwear under $110 are not subject to sales tax. Any items of clothing or footwear above this cut-off are subject to the full taxes of the applicable state and locality. Taxes are assessed on a per-item basis, so orders of over $110 will not be subject to taxes provided each item ordered does not exceed the limit.[10]
  3. Image titled Calculate New York Sales Tax Step 11
    Only charge tax on sales delivered within the state. Sales tax in New York is assessed as a "destination" tax. That is, the point of delivery or exchange is counted as the location of the sale. Therefore, any deliveries or in-person sales made inside the state are subject to New York sales tax, while any items delivered from a New York business to a customer outside the state are not.[11]
    • However, these items may be subject to a sales or use tax in the destination state or territory.
  4. Image titled Calculate New York Sales Tax Step 12
    Include shipping charges. In New York state, shipping charges are subject to sales tax. This is true whether the shipping is included in the price of the item or if it is charged separately. However, if the items sold are not taxable, the shipping is also not taxable. So, for example, the cost of shipping an item out of state is not taxable.[12]
  5. Image titled Calculate New York Sales Tax Step 13
    Adjust for discounts. Discounts on sales are subject to their own set of complex tax rules. For example, volume discounts offered by a seller and store-issued coupons both lower the amount of the sale subject to tax. That is, the after-discount price is used when calculating sales tax. However, manufacturer rebates, manufacturer discounts, and early-payment discounts do not lower the taxable amount of the sale.[13]
  6. Image titled Calculate New York Sales Tax Step 14
    Check for additional taxation. Some sales are subject to addition taxation above the required state and local taxes. These are typically applied to vehicle expenses, such as car rentals and parking. For example, an additional 11 percent is charged on car rentals made within the New York metro area. In addition, there is $1.50 per day tax assessed on hotel occupancy.[14]


Article Info

Categories: Taxes and Fees