Shoppers in New York State are getting back their clothing tax exemption on up to $110 per item.
Beginning Sunday, clothing and footwear priced under $110 will be exempt from the state’s 4 percent sales tax. The total cost of qualifying clothing and footwear items can exceed $110, as long as each individual item costs less than $110.
“We must do everything we can to ease the burden on working families,” said Assembly Speaker Sheldon Silver, D-Manhattan. “Families are struggling with the choice of paying for food, rent or clothing. This tax exemption will provide much needed relief to our residents.”
The tax savings will be even greater at stores in Chautauqua County, which also is dropping the local portion of the sales tax on those clothing purchases, making them sales tax-free. Most clothing in nearby Pennsylvania also is free of sales tax.
The application of the sales tax exemption currently is limited to an item costing less than $55.
Consumers welcomed the relief. Stephanie Poliniak, of North Tonawanda, wasn’t aware of the current $55 exemption but said she will feel better about buying clothes now that she knows about the expanded $110 exemption.
“Anytime you can save money, it’s good,” Poliniak said. “Everything is increasing in price, but your salary doesn’t increase.”
She spends about $200 every other month on clothing for her two children. Their Nike sneakers, priced from $60 to $80, will qualify for the expanded exemption starting Sunday. They didn’t qualify under the $55 exemption.
Heather Kelly, of the City of Tonawanda, said the expanded exemption won’t motivate her to buy any more clothing or spend more per item than she normally would.
“We buy on a need basis,” Kelly said.
To maximize her family’s budget, she buys her infant daughter’s clothing at thrift stores and consignment shops. Her older, more brand-conscious daughter prefers clothing from places such as Abercrombie & Fitch and Aeropostale, so she shops for her at stores such as Plato’s Closet whenever she can.
“I was surprised to learn that you have to pay taxes on used clothes,” she said. “You’re paying taxes twice.”
The 4 percent sales tax exemption on clothing had been in effect since March 2000 but was suspended from 2003 to 2006 and again in October 2010 in an effort to raise revenue to help close the state’s budget gap. Suspending the exemption brought in $330 million, the state said.
Before March 2000, the state suspended sales tax on qualifying clothing for a period of two weeks during the year. One week was usually timed to coincide with Labor Day, the peak of the back-to-school shopping season.
Those tax-free weeks were often highly hyped and accompanied by a suspension of local taxes, saving local consumers a total of about 8 percent on qualifying purchases. That resulted in a measurable increase in sales receipts during those weeks, which was a boon for retailers.
“Consumers got used to charging in and spending during that time, especially when it fell in time for back to school,” said Russ Fulton, general manager at Eastern Hills Mall. “With gas prices on the grow and at all-time highs, this could be a nice way to boost sales for retailers.”
Last March, the state began phasing out the tax, exempting clothing with a price tag of less than $55 from the levy. The state estimates that modified tax will end up bringing in a total of $210 million.
“This expanded state sales tax exemption will help relieve the tax burden at the cash register for all New Yorkers, saving a total of $220 million,” said State Sen. Michael H. Ranzenhofer, R-Amherst.
“Now, families and residents will notice a few extra dollars being returned to their pockets the next time they go to the store for clothes or shoes.”
Some retailers around the state have said that most consumers seem unaware of the current $55 exemption and that its year-round status does not give it the same sense of urgency that sends consumers scurrying to stores to shop. They have said the current exemption doesn’t do much to increase sales, and they doubt that an expanded one will, either.
But Fulton at Eastern Hills Mall said he will be using social media to tell consumers about the $110 clothing tax exemption and to let them know how they can couple it with the mall’s various promotions to maximize their savings.
“I, for one, am not looking a gift horse in the mouth,” Fulton said. “I welcome any and all savings and will constantly remind Eastern Hills customers how they can save money.”
New York City and nine counties, including Chautauqua, will also drop their local taxes on clothing and footwear purchases priced under $110. Most kinds of fabric, thread, yarn, buttons, hooks, zippers and other materials used to make or repair clothing will also be exempt.
Accessories such as watches and jewelry, and items such as tool belts and helmets do not qualify for the exemption.