Sales tax in New York City is a combination of state and local taxes added to most purchases

When you buy something in New York City, the price on the shelf is not the price you pay at the register. Sales tax is added to your purchase — it is a percentage of the sale amount that goes to the state and city governments. In New York City, the combined sales tax rate is 8.875 percent. This means a $100 purchase costs $108.88 after tax.

The 8.875 percent breaks down into three parts: New York State charges 4 percent, New York City adds 4.5 percent, and the Metropolitan Transportation Authority (MTA) adds 0.375 percent. You see one number at checkout, but it is actually three separate taxes stacked together. The MTA portion specifically funds public transit — subways, buses, and commuter rail.

Sales tax applies to most goods you buy in stores, restaurants, and online. It does not apply to all purchases — groceries, prescription medications, and some clothing items under $110 are exempt. The rules about what is taxed and what is not come from state law, so the same exemptions apply whether you are in New York City or upstate.

Key Takeaways

  • New York City's combined sales tax rate is 8.875 percent, made up of state tax (4 percent), city tax (4.5 percent), and MTA tax (0.375 percent).
  • Sales tax applies to most retail purchases, restaurant meals, and online orders shipped to New York City addresses.
  • Groceries, prescription drugs, and clothing items under $110 are not subject to sales tax in New York.
  • The tax is collected by the seller at the point of sale and sent to the state and city governments.
  • Sales tax rates are the same across all five boroughs of New York City.

What purchases are taxed and what are not

Most items you buy in stores are subject to sales tax. Clothing, electronics, furniture, books, toys, and household goods all get taxed. Restaurant meals and takeout food are taxed. Delivery services, haircuts, and repairs are taxed. If you order something online and it ships to a New York City address, sales tax is added at checkout.

Some purchases are specifically exempt from sales tax under New York State law. Groceries — including bread, milk, vegetables, meat, and canned goods — are not taxed. Prescription medications filled by a pharmacist are not taxed, but over-the-counter medicines like aspirin or cold medicine are taxed. Clothing and footwear under $110 per item are exempt, but if a coat costs $150, the full amount is taxed.

A few other categories have no sales tax: newspapers and magazines, medical equipment prescribed by a doctor, and certain energy sources like heating oil and natural gas used in your home. The line between taxed and untaxed can be confusing — for example, a candy bar is taxed, but a loaf of bread is not, even though both are food.

How the tax is collected and where it goes

The seller collects sales tax from you at the point of sale. When you buy something, the cashier or online checkout adds the tax to your total. The seller then holds that money and sends it to the New York State Department of Taxation and Finance, usually monthly or quarterly depending on the business size.

Once the state receives the tax money, it is split among three destinations. The state keeps its 4 percent share. The city of New York receives its 4.5 percent share, which goes into the general city budget for schools, police, sanitation, and other services. The MTA receives the 0.375 percent share, which funds the subway system, bus network, and commuter rail services.

Businesses are responsible for collecting and sending in the tax correctly. If a business fails to collect or send sales tax, the state can audit them and impose penalties. As a customer, you do not send in sales tax yourself — the business handles it.

Sales tax on online purchases and out-of-state orders

If you order something online from a retailer and it ships to your New York City address, sales tax is added. This applies whether the retailer is based in New York or anywhere else in the country. Large online retailers like Amazon, Walmart, and Target all collect New York sales tax on orders shipped to the city.

The rule changed in recent years because of a U.S. Supreme Court decision. Before 2018, online retailers without a physical location in New York were not required to collect sales tax. Now, most retailers collect it regardless of where they are located. If you order from a small out-of-state business that does not collect sales tax, you are technically supposed to report that purchase to the state and pay the tax yourself — but this rarely happens in practice.

If you order something from outside the United States and it is shipped to New York City, you may owe sales tax when it arrives, or you may owe a customs duty instead. The rules depend on the country of origin and the type of item.

Sales tax on services and special situations

Services are taxed in New York City, though not all of them. A haircut or salon service is taxed. Dry cleaning is taxed. Car repairs are taxed. However, some services are exempt — for example, legal services and accounting services are not taxed, and neither are most medical services performed by a doctor or dentist.

Hotel rooms in New York City are subject to sales tax plus a separate hotel occupancy tax. The sales tax is 8.875 percent, and the hotel tax adds another 5.875 percent on top of that, for a total of 14.75 percent. This applies to all hotels, motels, and short-term rentals in the city.

Parking garages and parking lots charge sales tax on the parking fee. Movie tickets are taxed. Gym memberships are taxed. Streaming services like Netflix or Spotify are taxed if you have a New York address on your account. The tax applies to the subscription price you pay each month.

How to calculate sales tax on a purchase

To calculate sales tax on a purchase, multiply the price by 0.08875. For a $50 item, the tax is $50 × 0.08875 = $4.44, so the total is $54.44. For a $200 purchase, the tax is $200 × 0.08875 = $17.75, for a total of $217.75.

Most of the time, you do not need to calculate this yourself — the register or online checkout does it for you. But if you want to know what the tax will be before you check out, this is the formula. Keep in mind that if any of the items in your purchase are exempt from tax (like groceries), those items are not included in the calculation.

Sales tax is rounded to the nearest cent. If the calculation results in a fraction of a cent, it is rounded up or down depending on the amount. This is why the total at the register might be a penny different from what you calculated by hand.

Differences between New York City and other parts of New York State

Sales tax rates vary across New York State. New York City has the highest rate at 8.875 percent. In Westchester County, just north of the city, the rate is 8.875 percent as well. But in other parts of the state, the rate is lower — for example, in some upstate counties it is 8 percent or 8.5 percent.

The difference exists because each county and city can add its own local sales tax on top of the state rate. New York City's local rate is higher than most other places in the state because the city and MTA add their portions. If you buy something in Buffalo or Rochester, you will pay a lower sales tax rate than you would in New York City.

The exemptions for groceries, prescription drugs, and clothing under $110 are the same statewide — those are set by state law. But some local taxes apply differently in different places. For example, the MTA tax (0.375 percent) only applies in the MTA region, which includes New York City and some surrounding counties.

Frequently Asked Questions

Do I have to pay sales tax on groceries in New York City?

No. Groceries are exempt from sales tax under New York State law. This includes bread, milk, vegetables, meat, eggs, and canned goods. However, prepared foods like rotisserie chicken, deli sandwiches, or hot pizza are taxed because they are considered ready-to-eat meals, not groceries.

Is sales tax added to restaurant bills in New York City?

Yes. Restaurant meals, whether you eat in or take out, are subject to the 8.875 percent sales tax. The tax is added to the subtotal before you calculate the tip. Some people tip on the pre-tax amount, others on the post-tax amount — there is no rule.

What happens if a business charges me the wrong sales tax?

If you notice a business charged you too much sales tax, you can ask them to correct it. If they charged you too little, you do not owe the difference — that is the business's responsibility to the state. If you believe a business is systematically overcharging tax, you can report it to the New York State Department of Taxation and Finance.

Do I pay sales tax on clothing in New York City?

It depends on the price. Clothing and footwear items under $110 are exempt from sales tax. If a shirt costs $80, there is no tax. If a coat costs $150, the full amount is taxed. The $110 threshold applies per item, not per purchase.

Are prescription medications taxed in New York City?

No. Prescription medications filled by a licensed pharmacist are exempt from sales tax. Over-the-counter medications like aspirin, cough syrup, or allergy pills are taxed because they do not require a prescription.