New York Sales Tax and Invoicing Rules for 2026

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.

Step-by-step: register and start collecting in New York

1. Determine nexus — physical presence in NY (Manhattan office, Brooklyn warehouse, employees) creates immediate nexus. Economic nexus: $500,000 in gross receipts AND 100 transactions to NY buyers in the prior four sales-tax quarters (NY's bar is higher than most states).
2. Register via NYS Online Services — apply for a Certificate of Authority through the NY Department of Taxation and Finance. Processing typically takes 5–10 business days at no fee. Doing business without one carries criminal penalties.
3. Configure state 4% + local 3%–4.875% — NY state rate is 4%, plus county/city local rates. NYC is 4.5% local + 0.375% MCTD = 8.875% combined. Counties range 3%–4.875%. Configure ZIP-based rate lookup.
4. Capture exemption certificates — Form ST-120 (Resale Certificate); ST-119.1 for nonprofits; ST-121 for manufacturers. Hold for 3 years post-transaction. NY enforces certificate documentation strictly.
5. File via NYS Online Services — frequency assigned: quarterly for under $300K annual taxable sales, monthly for $300K+, part-quarterly for very large sellers. Returns due the 20th of the month following the period.

Real New York compliance situations

• A Manhattan-based fashion retailer charges 8.875% combined in NYC. Clothing under $110 per item is exempt from the 4% state portion AND from NYC's 4.5% local portion in some areas — the actual rate on a $90 t-shirt in NYC is 0%, but auditors check that exempt items aren't being mis-charged.
• A Brooklyn SaaS provider confirmed New York taxes SaaS as a "sale of pre-written software." They charge 8.875% on B2B SaaS subscriptions to NYC customers and capture certificates from NY-based resellers. The NY Tax Department's recent SaaS guidance has been a frequent audit topic.
• An Albany e-commerce store ships statewide. Albany County's 8% combined rate differs from neighboring Rensselaer (8%) and Saratoga (7%). They use ZIP-based rates and verify quarterly against the NY DTF rate lookup tool.

More New York FAQs

Is clothing exempt in New York? Clothing and footwear under $110 per item are exempt from the NY 4% state sales tax. Local jurisdictions can opt in or out of the local exemption. NYC, Chautauqua, Chenango, Columbia, Delaware, Greene, Hamilton, Madison (outside Oneida), Tioga, and Wayne fully exempt clothing under $110. Other counties charge their local rate.

Is SaaS taxable in New York? Yes — NY treats SaaS as a sale of pre-written software, taxable at the buyer's combined rate. This includes cloud-based software, subscription services, and most software accessed remotely. Custom software for a single buyer is generally not taxable.

Does NY have a sales tax holiday? Not currently. New York held back-to-school holidays historically but has not run them in recent years. The clothing-under-$110 exemption is the de-facto year-round equivalent for many items.

What's the MCTD? The Metropolitan Commuter Transportation District (MCTD) imposes a 0.375% sales tax on top of the state and local rates in 12 NY counties (NYC's five boroughs plus Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester). It funds MTA operations.