Does New York charge sales tax on services?
by February 8, 2024
Please note: This blog was originally published in 2021. It’s since been updated for accuracy and comprehensiveness.
Almost every US state requires sellers to charge sales tax on tangible personal property, also known as physical goods. Many states also implement sales and use tax on digital goods and SaaS offerings. Because the economy has shifted over time from a manufacturing economy to a service economy, states are now looking to generate revenue by enacting tax laws that make services taxable as well.
Here’s what merchants need to know about taxing services in New York state.
Are services subject to New York sales tax?
Many services are subject to New York’s 4% sales tax rate:
- utility and (intrastate) telecommunication services
- telephone answering services
- prepaid telephone calling services
- mobile telecommunication services
- certain information services
- processing, fabricating, printing, or imprinting of tangible personal property for a customer who furnishes the tangible personal property and doesn’t plan to resell it
- maintaining, installing, servicing, and repairing of tangible personal property
- storing tangible personal property (does not include certain rentals of mini-storage units that constitute the rental of real property – see Tax Bulletin Household Movers and Warehousers – General (permanent) storage and portable storage containers (TB-ST-340) and TSB-M-86(3)S)
- maintaining, servicing, and repairing real property
- certain parking and garaging or storing of motor vehicles
- interior decorating and design services
- protective and detective services
- passenger transportation services with a driver using limousines, black cars, and certain other motor vehicles (not including taxi and bus services – see TSB-M-09(7)S)
- furnishing or providing entertainment or information by telephone or telegraph
- hotel occupancy
- admission charges to a place of amusement
- social and athletic club dues
- certain portions of cabaret charges
In addition, some services are only subject to New York City’s sales tax:
- beautician services, barbering, and hair restoring
- tanning
- manicure and pedicure
- electrolysis
- massage services
- services provided by weight control and health salons, gymnasiums, Turkish and sauna baths, and similar facilities, including any charge for the use of these facilities
- written or oral credit rating services (see TSB-M-15(4)S)
- oral credit reporting services not delivered by telephone
Please keep in mind that this is a guideline, and you should consult with a sales tax professional to determine if the services your business provides should be taxed. For an in-depth look at sales tax in New York, TaxJar’s guide to sales tax in New York and the New York Department of Taxation and Finance has more details.
How to stay compliant with sales tax when you sell services
Managing all the moving parts of sales tax can be challenging. Are accounting services taxed? What about hair care or car maintenance? They may not be taxed in your state today, but sales tax laws change all the time. TaxJar makes it easier for you to stay current with it all, especially as you scale your business across states.
If you need to charge sales tax on services, TaxJar takes all of these state laws into account and makes your job simple. To learn more about TaxJar and get started automating your sales tax compliance, start a free, 30-day trial today.
