New York Sales Tax and Invoicing Rules for 2026

TL;DR: New York's state sales tax rate is 4%, but combined rates with local taxes range from 4% to 8.875% (NYC). Economic nexus applies at $500,000 in sales AND more than 100 transactions in the state. Clothing under $110 per item is exempt in NYC and several other jurisdictions.

State sales tax rate

New York levies a 4% state sales tax. Counties and cities add their own local taxes, typically 3% to 4.875% additional.

New York City has a combined rate of 8.875% (4% state + 4.5% city + 0.375% MCTD surcharge). Westchester County sits at 8.375%, while some rural counties are closer to 8%.

New York uses destination-based sourcing, so you charge the rate where the buyer receives the goods. This makes accurate address-based rate lookup essential for remote sellers.

Nexus rules

Physical nexus exists through offices, employees, inventory, or property in the state. New York also applies click-through nexus — if a New York-based affiliate or referral partner drives more than $10,000 in sales through links, the out-of-state seller may be deemed to have nexus.

Economic nexus requires both $500,000+ in gross receipts from New York sales AND more than 100 transactions delivered into New York in the prior four quarterly periods. Both thresholds must be met.

Marketplace facilitators must collect tax on behalf of marketplace sellers.

Invoice requirements

The New York Department of Taxation and Finance expects records that include:

• Date of sale
• Seller's name, address, and tax ID
• Buyer information
• Description of goods or services
• Quantity and price
• Tax amount
• Total charged

Sales tax must appear as a separate line on the invoice. For exempt sales, retain the appropriate exemption certificate (Form ST-120 for resale, Form ST-119.1 for exempt organizations). Records must be kept for a minimum of three years from the filing date.

Exemptions and special cases

Clothing and footwear items priced under $110 are exempt from the 4% state tax and also exempt from local tax in NYC and several other jurisdictions.

Unprepared food and prescription drugs are exempt. Residential energy (gas, electricity) has partial exemptions. Manufacturing equipment purchased for use directly in production is exempt.

SaaS is taxable in New York — pre-written software accessed electronically is treated as tangible personal property. Custom software developed specifically for a single client may be exempt.

Digital products like e-books, music, and streaming are generally taxable.

Filing frequency and deadlines

Filing frequency is assigned based on tax collected:

• Quarterly — default for most businesses (March 20, June 20, September 20, December 20)
• Monthly — over $300,000 annually, due the 20th of the following month
• Annual — very small filers, due March 20

Part-quarterly (PrompTax) filers with over $500,000 in annual liability must remit tax on an accelerated schedule within the quarter.

Vendors collecting tax may keep a 5% vendor credit up to $200 per quarter.

Penalties for non-compliance

Late filing triggers a penalty of 10% of the tax due for the first month, plus 1% per month thereafter (capped at 30%). Interest runs at the current rate set by the Department.

Willful failure to collect or remit sales tax can result in criminal prosecution — New York is notably aggressive in pursuing sales tax fraud.

FAQ

Is the clothing exemption automatic in New York?

Yes, for items under $110 per piece. You do not charge state sales tax (and in NYC, no local tax either) on qualifying clothing and footwear. Items at $110 or above are fully taxable. No exemption certificate is needed from the buyer.

Do I have economic nexus if I have $600,000 in New York sales but only 50 transactions?

No. New York requires both thresholds to be met — $500,000 in sales AND more than 100 transactions. If you only meet one, you do not have economic nexus (though you may still have physical or click-through nexus).

Are digital products taxable in New York?

Yes. New York taxes pre-written software, digital music, e-books, streaming services, and similar digital products. If you sell digital goods to New York customers, you must collect sales tax.

Look up the exact combined rate for any New York address with InvoiceQuickly's tax rate tool.