New York Restores Apparel Sales-Tax Break on Items Under $110

Those shoes you’ve been eyeing at DSW Inc. (DSW) will cost you less starting April 1 when New York state raises the sales-tax exemption to $110 for clothing and footwear purchases.

Shoppers will get a break from the 4 percent state sales tax as well as a 0.375 percent Metropolitan Commuter Transportation District tax. In New York City, purchases under $110 have already been exempt from the city’s own 4.5 percent sales tax which makes a total of 8.875 percent or about $8.88 in savings on a $100 item.

“You can’t split a suit in half,” to meet the exemption, said Wayne Berkowitz, a partner and head of the State and Local Tax Group with Berdon LLP in New York. “If you’re buying five items and they’re all under-$110 items, you’re good.”

The full tax exemption returns after a more than one-year hiatus when it was amended to help close a state budget shortfall. From October 2010 to March 2011 there was no relief from the state sales tax or the commuter surcharge. Those breaks returned for items of less than $55 in price from April 2011 through March.

Removing the exemption entirely for the six months starting in 2010 generated about $330 million in revenue for the state, according to Morris Peters, spokesman for the New York State Budget Division. Reinstating it at the $55 level rather than at $110 for one year brought in about $210 million for the state. New York City exempts clothing and footwear purchases under $110 from local sales tax and will continue to do so as of April 1, according to documents from the city’s Office of Management and Budget.

“We’re pleased the exemption can again be offered,” Peters said.

No Rental Wear

The tax break applies only to apparel items for people, and generally includes yarn, fabric and other clothing components. It excludes accessories such as watches and jewelry, equipment such as motorcycle helmets and costumes or formal wear that’s rented. Antique clothes meet the exemption if they’re purchased for wear, rather than as collectibles.

Berkowitz said he isn’t planning to hit the stores on Sunday to take advantage of the savings. “My daughter’s in college. I can’t buy clothes for myself,” he said. “All my partners can go out and buy suits now.”

To contact the reporter on this story: Elizabeth Ody in New York eody@bloomberg.net

To contact the editor responsible for this story: Rick Levinson at rlevinson2@bloomberg.net.

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