For many retailers, understanding how sales tax applies to footwear is crucial. Sales tax laws on shoes can vary significantly depending on the state where you’re doing business. Knowing the exemptions can help you stay compliant, avoiding issues with both customers and tax authorities.
In this blog post, we’ll walk you through the key regulations surrounding sales tax for shoes, with a focus on states like New York and New Jersey where specific exemptions apply.
Is There Tax on Shoes in the US?
Whether clothing and shoes are taxable depends on the state in which the transaction occurs. In many states, shoes are considered a taxable item like any other, but there are important exceptions that sellers should be aware of.
Some states offer exemptions based on the price of the footwear or its intended use e.g., shoes for sport or work. It’s important to keep track of these rules, especially if you’re selling in multiple states or online.
Shoes Sales Tax: State by State
This overview is general and may not cover all specifics, especially regarding exemptions for specialist shoes. Check the applicable local regulations for up-to-date information.
Tax Holidays and Special Rules
Unfortunately, there isn’t a blanket rule for the taxability of shoes. In some states, footwear is exempt from sales tax only at a certain time of year, under a set price point, or in specific localities.
- Tax holidays: Many states, including Texas, Florida, and Missouri, offer tax-free holidays or weekends, often in back-to-school seasons, during which shoes are tax-exempt.
- Price thresholds: States like Connecticut, Massachusetts, New York, and Vermont exempt shoes from sales tax below a certain price point. They don’t want to miss out on the taxes from sales of more ‘luxury’ goods.
- Local taxes: In states like Alaska and Colorado, local municipalities may impose their own sales taxes even if the state doesn't.
New Jersey Sales Tax on Shoes
In New Jersey, most clothing and footwear, including shoes, are exempt from sales tax. This makes New Jersey an attractive market for consumers looking to purchase shoes without the added cost of sales tax.
“If you’re a seller, it’s important to keep track of the exceptions to this rule. Specialty items, such as working boots or shoes designed specifically for sport, may still be taxable.” – Gareth Kobrin, Global Tax Expert
New York Sales Tax on Shoes
New York has a more complex system for taxing footwear. In general, New York sales tax applies to footwear that costs more than $110. This threshold-based exemption also applies to individual items within a pair. For instance, if one item costs $60 and another costs $50, neither is taxable under the New York rules.
Retailers should be aware that NY’s sales tax on shoes can vary depending on the location. In some counties and cities, like New York City, local sales tax may still apply to shoes under $110, even though they are exempt from the state tax.
How Retailers Can Stay Compliant
Staying on top of varying sales tax rates for shoes can be challenging, especially if you’re dealing with other types of products as well. Here are some steps you can take to ensure compliance:
- Monitor state-specific rules: Different states like New York and New Jersey have their own rules regarding footwear exemptions. Regularly review the regulations where your business has sales tax nexus.
- Automate your sales tax calculations: Use sales tax software that automatically applies the correct tax rate based on the customer’s location and the product’s price. This is especially important for multi-state retailers selling shoes online.
- Track local exemptions: Stay informed about any local taxes that apply in specific counties or cities. (An automated solution will do this for you.)
- Educate your staff: Make sure your sales team understands the tax rules that apply to footwear sales and can clearly communicate the rules to any confused customers.
- Review product categories carefully: Not all footwear is created equal in the eyes of tax authorities. Check whether any of your shoes qualify for exemptions and apply the correct product tax codes.
By staying informed and taking proactive steps, you can make sure your business collects the correct rate of sales tax on shoes across different states.
Calculate Your Sales Tax Rates
Yonda Tax automates your sales tax process, factoring in the applicable exemptions in each state where you have nexus. Contact us to learn how we can make compliance easier for your business.
The information in this article is true to the best of our knowledge at the time of writing, but sales tax regulations can change very quickly. You should always consult a tax professional for legal advice.