In this article
- What’s taxable in New York?
- What are non-taxable items or sales tax exemptions in New York?
- Do you have sales tax nexus in New York?
- Sales tax rates in New York
- How to calculate sales tax in New York
- New York sales tax and marketplaces
- Sales tax on shipping charges in New York
- How to register for a New York sales tax permit
- Sales tax guides for other states
Whether you’ve fully set up shop in New York or simply ship there occasionally, it’s important you know whether your business is liable to their sales taxes. In our 10+ years of experience helping online businesses comply with taxes, we’ve found that tax policies are confusing. So we translated all the information from the New York Department of Taxation and Finance into language that’s easy to understand.
This guide will tell you everything you need to know, plus direct you to the right places for handling any sales tax responsibility you may have.
What’s taxable in New York?
Below is an overview of products that are generally taxable in Massachusetts. Some local cities or districts might have their own rules or exceptions, however. For example, check out the New York City Sales Tax Guide for the specific rules in the NY State capital.
Tangible personal property
Tangible goods in New York are generally taxable. However, exemptions apply for some items, which you can see in the next section. It's wise to check specifics on the New York Department of Taxation and Finance website.
Services
Professional services, such as legal, architectural, and landscaping, might be taxable, though many exemptions exist. Verify the taxability of your service with the New York Department of Revenue.
Software-as-a-Service (SaaS)
New York taxes SaaS under its current definitions of remotely accessed software. To understand how this applies to your service, check the NY guidelines on computer software and related services.
What are non-taxable items or sales tax exemptions in New York?
New York has significant tax exemptions, covering items such as:
- Services are generally exempt, unless specifically taxable
- Certain groceries
- Menstrual hygiene products
- Newspapers and periodicals
- College textbooks
- Over-the-counter and prescription drugs and medicines
- Medical equipment and supplies, unless sold for use in providing medical or similar services for compensation
- Certain clothing and footwear sold for less than $110 per item (may be subject to local taxes)
- Property or services used in farming and horse boarding
Explore the full list of exemptions on the New York tax exemption page.
Do you have sales tax nexus in New York?
The word “nexus” refers to a commercial connection in the state. Nexus determines the following questions for a state tax agency: Do you do business here, what kind, and how much? And when you do have nexus, that means you’re obligated to collect tax on your sales there. So the first question for you to answer is whether you have nexus in California.
New York physical nexus
| Nexus Type | Description | |----------------------------------|-------------------------------------------------------------------------------------------------| | Owning an office or place of business | Having a physical business location within the state of New York. | | Having employees | Employing individuals who work within the state of New York. | | Having goods or inventory | Storing products or inventory in New York state. | | Owning tangible personal property| Owning other forms of tangible property located in New York. | | Delivering merchandise | Using taxpayer-owned vehicles to transport goods into the state of New York. | | Affiliate Nexus | Ties to businesses or affiliates in NY, involving design/sales solicitation of goods on one's behalf. | | Click-through Nexus | Agreements referring sales over $10,000 via links or websites in New York. | | Trade Shows | Collecting/remitting use tax for sales/orders at trade shows in New York, except for mere attendance. |
Learn more about NY sales tax physical nexus.
New York economic nexus
- A significant amount of sales in New York within twelve months. This is called an economic nexus, a sales tax nexus determined by economic activity, i.e. – the amount of sales you make in a particular state, not including sales through a marketplace.
- The threshold in New York is** $500,000 in sales** and more than 100 transactions annually.
To learn more about how this works, check out the Ultimate Guide to US Economic Nexus.
Sales tax rates in New York
Tax rates can vary based on the location of your business and the location of your customer, plus the levels of sales tax that apply in those specific locations.
The base NY state sales tax is 4%. There are additional levels of sales tax at local jurisdictions, too. The total New York sales tax rate a customer will pay is made up of two, potentially three rates.
-
State Base Rate: 4%
-
Local Taxes: Can add up to 4.75%
-
A Metropolitan Commuter Transportation District surcharge: An additional 0.375% in certain areas
| Tax Component | Description | |-----------------------|-----------------------------------------------------| | State Base Rate | 4% | | Local Taxes | Can add up to 4.75% | | MCTD Surcharge | An additional 0.375% in certain areas |
Here are some examples of the tax being charged in different locations:
New York City region
- Brooklyn (Kings County) Sales Tax: 8.875%
- Manhattan (New York County) Sales Tax: 8.875%
- Staten Island (Richmond County) Sales Tax: 8.875%
Western New York
- Buffalo Sales Tax: 8.75%
- Rochester Sales Tax: 8.00%
Upstate New York
- Albany Sales Tax: 8.00%
- Syracuse (Onondaga County) Sales Tax: 8.00%
Long Island
- Nassau County Sales Tax: 8.625%
- Suffolk County Sales Tax: 8.625%
For precise calculations, use Quaderno’s Sales Tax Calculator to determine the applicable rates for each sale.
How to calculate sales tax in New York
New York has a destination-based sales tax system, so you have to pay attention to the varying tax rates across the state. Charge the tax rate of the buyer’s address, as that’s the destination of your product or service. Add it to the price of your product, and collect the full payment.
New York sales tax and marketplaces
In New York, marketplaces collect and remit sales tax due on sales through their platforms. Key points include:
- Marketplace facilitators tally sales for economic nexus.
- Sellers count marketplace sales towards their nexus obligations.
More information is available in the marketplace guidelines for New York.
Sales tax on shipping charges in New York
Shipping fees are taxable if related to taxable goods. For mixed shipments, taxes apply to the entire shipping cost. Check out the New York Department of Revenue’s guidelines on shipping and delivery charges.
How to register for a New York sales tax permit
New York allows remote and foreign sellers to register for sales tax online.
The goal is to register with the tax department to receive a Certificate of Authority, which is basically a permit to collect sales tax. Legally you must do this 20 days before you make your first sale in New York, and you must wait until you receive your certificate to make any taxable sales.
But first you must register as a NY sales tax vendor with New York Business Express and create a NY.gov business account. (This portal is also where you’ll file and pay your tax returns. For information on how to file, check out this New York sales tax filing guide.)
Start on the New York Business Express website and select “Apply Online.”
Be prepared to share the following information:
- Your social security number or visa number
- Your date of birth
- Your driver license number, state ID number, or other ID (e.g., passport, military ID)
- Names and location of banks where you have an account
- Names and addresses of suppliers
- Name and address of bookkeeper or accountant
- Name and address of personal references
- Expected average monthly sales and the amount of those sales which are taxable
- Your email address
- If you’ve purchased an existing business, you must also provide the previous permit information
Create New York Business Express profile and apply for sales tax permit
-
First you set up your business information, then you fill out the application. The interface is clean and smooth -- it will lead you through every piece of information!
-
You will be asked about a Federal Employer Identification Number (FEIN or EIN). If you aren’t familiar with this, take a moment to read about what an EIN number is and how to get one.
If you don’t have an EIN or a social security number, then you must provide your business tax ID from your home country.
-
Provide physical addresses of your business, even if that’s overseas. All correspondence, including your license/permit, will be sent to the physical address listed.
-
You need to identify which industry you’re working in by providing its North American Industry Classification System number. Each number is a 2-6 digit code. You can find yours in the NAICS directory. New York’s portal also offers help with this!
-
After a bit more data entry about owners of the business, you’ll head straight into the application. There will be a few questions about what your business sells and when it started/will start operating in New York. If you have everything from the checklist, then you’ll be fine!
Once your application is approved, your Certificate of Authority will be mailed to you within five days. If you live abroad, obviously this will take longer. Along with the certificate, you'll receive a sales tax ID number from the NYS Department of Taxation and Finance.
If you have any questions, you can contact the Department of Taxation and Finance.
Once registered, you’ll be assigned a tax filing frequency: monthly, quarterly, or yearly.
Sales tax guides for other states
Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the tax authorities.