The State of New York’s Sales Tax

Local governments in New York are heavily dependent on sales tax revenue, which has dried up amid the Covid-19 pandemic and ensuring economic fallout, a report by state Comptroller Thomas DiNapoli found. By the numbers:

• The taxes collected from the sale of goods and services, and additional taxes on specific services and commodities, are an increasingly significant source of revenue for many New York State local governments. All counties and cities, many towns and villages, and even some school districts depend on revenue from local sales taxes.
• Sales tax revenue amounted to $16.9 billion, or 9.7 percent, of the total revenue for local governments in 2019. In New York City, sales taxes generate 8.7 percent of total revenue; for other cities – most of which have fewer other revenue sources – they account for an average of 19 percent of total revenues. On average, county sales taxes represent nearly 29 percent of all county revenues, which does not include sales tax collections shared with other local governments. Sales tax accounts for 9 percent and 6 percent of the town and village total revenues, respectively.
• Local sales tax rates range from 3 percent to 4.75 percent, which is added to the State rate of 4 percent. A State-imposed 0.375 percent surcharge on behalf of the Metropolitan Commuter Transportation District is also applied to some downstate counties and cities, including New York City.
• The average combined state and local sales tax rate is 8.45 percent in New York State, which is the seventh highest in the nation. Nearly three-fourths of the State’s population resides in areas that have a combined rate higher than 8 percent.
• The local sales tax is imposed by all 57 counties outside of New York City, the City itself, and 17 other cities independently of their counties. In addition, 46 counties share a portion of their sales tax revenue with cities that do not impose sales taxes and other local governments within their borders, amounting to almost 23 percent of all county sales tax revenue collected. The amount shared is made in accordance with statute or sharing agreements approved by a county and the cities within the county or at the discretion of the county.

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