New York sales-tax exemptions can reduce tax on qualifying purchases, including resale inventory, manufacturing equipment, agricultural supplies, and certain nonprofit or government purchases. Businesses must follow the Department of Taxation and Finance’s rules and retain valid documentation.
This article is educational information, not tax advice. New York rates, forms, thresholds, and exemptions can change; verify current requirements with the state.
New York Sales-Tax Exemption
Businesses that collect sales tax generally need a Certificate of Authority. Buyers claim an eligible exemption by providing the seller with the correct certificate at the time of purchase.
Common qualifying groups and activities include:
- Retailers and wholesalers purchasing goods for resale.
- Nonprofit, religious, and educational organizations making qualifying purchases.
- Manufacturers purchasing machinery, equipment, and raw materials used directly in production.
- Agricultural producers purchasing qualifying supplies.
- Government entities purchasing for official purposes.
- Businesses engaged in qualifying interstate commerce.
- Healthcare providers purchasing qualifying equipment or supplies.
New York Exemption Certificates
New York uses a different certificate for each type of exemption. The most common, according to the Department of Taxation and Finance:
| Form | Used for | Certificate of Authority needed? |
|---|---|---|
| ST-120, Resale Certificate | Buying goods or services to resell | Yes, unless the buyer is out of state |
| ST-120.1, Contractor Exempt Purchase Certificate | Contractors buying property to be incorporated into real property on qualifying projects | Yes |
| ST-121, Exempt Use Certificate | Exempt uses such as manufacturing production equipment | Depends on the exemption claimed |
| ST-119.1, Exempt Organization Exempt Purchase Certificate | Purchases by organizations the state has recognized as exempt | No |
| ST-125, Farmer's and Commercial Horse Boarding Operator's Exemption Certificate | Qualifying farm production purchases | No |
Specialized versions of the exempt use certificate (ST-121.1 through ST-121.5) cover items such as certain vehicles, promotional materials, computer hardware, textbooks, and data center equipment.
Rules for sellers accepting certificates
- Timing: the buyer must give the seller a properly completed certificate within 90 days of the sale, preferably at the time of sale.
- Good faith: a seller who accepts a properly completed certificate in good faith, with no knowledge that it is false, is protected from liability for the tax.
- Blanket certificates: buyers making repeated purchases of the same kind can give one blanket certificate instead of a certificate per transaction.
- Retention: keep certificates and related records for at least three years from the due date of the return on which the last related sale was reported, or from the date that return was filed, if later (NY recordkeeping bulletin).
Product Exemptions
Some exemptions apply to the product itself, not the buyer, so no certificate is needed:
- Clothing and footwear under $110. Items sold for less than $110 per item or pair are exempt from the 4% New York State sales tax. The exemption applies to local tax only where the county or city has elected it, so the rate on the same shirt can differ by location. Publication 718-C lists which localities provide the exemption (see the Clothing and Footwear Exemption bulletin).
- Menstrual products. Tampons, pads, panty liners, and similar products have been exempt from state and local sales tax since September 1, 2016 (TSB-M-16(6)S).
Benefits for Companies
Properly documented exemptions can lower operating costs, improve cash flow, support growth and innovation, and reduce audit risk.
Eligibility Requirements
Businesses should maintain a Certificate of Authority where required, use the appropriate exemption certificate such as ST-120 or ST-121, use purchases for the qualifying purpose, keep records for the required retention period, and file returns accurately.
Required Documents
Depending on the exemption, documentation may include a Certificate of Authority, resale or exempt-use certificate, business registration, FEIN, nonprofit determination, proof of business activity, purchase records, and government-issued identification.
Applying for an Exemption
- Obtain a Certificate of Authority when required.
- Determine whether the business activity and purchase qualify.
- Gather supporting documentation.
- Complete the applicable exemption certificate.
- Give it to the vendor at purchase, or within 90 days.
- Maintain certificates, invoices, and sales records.
- Update certificates when business activity or eligibility changes.
Who Must Register in New York
A business needs a Certificate of Authority before making taxable sales in New York. Businesses with a physical presence register with the Department of Taxation and Finance before they begin doing business.
Remote sellers with no physical presence must register once, over the immediately preceding four sales tax quarters, they had more than $500,000 in gross receipts from sales of tangible personal property delivered into New York and more than 100 such sales. Both conditions must be met (Department of Taxation and Finance).
New York Compliance Tips
Register correctly, distinguish taxable and exempt items, apply current state and local rates, retain documentation, file on time, and use software to organize certificates and rate changes.
FAQs
How do I get a New York sales tax exemption certificate?
For most exemptions, you do not apply to the state for a certificate. You complete the correct form (such as ST-120 for resale or ST-121 for an exempt use) and give it to the seller. Nonprofits are the main exception: they must first apply for exempt organization status and receive an exempt organization certificate from the Department before they can use Form ST-119.1.
Does a New York resale certificate expire?
The form itself has no set expiration, but a seller should get an updated certificate when the buyer's information or activity changes, and must keep certificates for at least three years from the due date of the return reporting the last related sale, or the date that return was filed, if later.
Can an out-of-state business use a New York resale certificate?
Yes. An out-of-state buyer that is not required to register in New York may issue Form ST-120 without a New York Certificate of Authority, provided it is buying for resale.
Is clothing tax-free in New York?
Clothing and footwear under $110 per item are exempt from the state's 4% tax. Local tax still applies in localities that have not elected the exemption.
How long does a seller have to collect an exemption certificate?
Within 90 days of the sale. Without a certificate, the seller may be held liable for the tax.
Manage New York Exemptions with Kintsugi
Kintsugi can help track certificates, classify transactions, apply configured rates, organize records, and prepare reporting workflows for New York businesses.
Related resource: For current rates, nexus thresholds, filing deadlines, and FAQs, see Kintsugi's New York Sales Tax Guide.
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