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Info about the Clothing sales tax category

What do I need to know about the clothing sales tax category?

Best answer 05-06-2019

Accepted Solutions
Moderator

Re: Info about the clothing sales tax category

The definition of what qualifies as clothing (clothing accessories, work clothing, protective equipment, etc.) varies from state to state, so an item may qualify for the clothing exemption in one state, but not in another.

 

For example, an article of clothing that costs $1,200 is subject to different thresholds in Massachusetts, New York, and Rhode Island, taxable at a special rate in Connecticut, fully taxable in some states, and exempt in others.

 

By properly mapping to the correct clothing tax category, the sales tax feature in QuickBooks Online will ensure that the proper taxability, rate, and threshold rules are applied across all jurisdictions.

 

sales-tax-categories-quickbooks-online_clothes.png

 

1 state taxes luxury clothing at a higher rate

Connecticut

 

4 states provide general exemptions for clothing

Minnesota

Pennsylvania

New Jersey

Vermont

 

16 states have sales tax holidays that provide exemptions for certain articles of clothing for limited periods of time

Alabama

Maryland

Ohio

Texas

Connecticut

Missouri

Oklahoma

Virginia

Florida

Mississippi

South Carolina

Wisconsin

Iowa

New Mexico

Tennessee

Puerto Rico

 

4 states have clothing dollar amount thresholds

Connecticut

$50

New York

$100

Massachusetts

$175

Rhode Island$250


Examples of how the thresholds work:

Note: These calculations are handled automatically with QuickBooks Online.

Example 1 - Massachusetts
Massachusetts has a 6.25% sales tax rate for the entire state. For clothing, only the amount over the $175 threshold is subject to sales tax.

• Sales Transaction A: $100 Blouse. No sales tax applies because blouse is under $175
• Sales Transaction B: $200 Blouse. Sales tax applies only to the portion over the threshold; $25. $200 - $175 = $25 * 6.25% = $1.56 Sales Tax

Example 2 - New York
New York has an 8.875% sales tax rate in NYC and other rates varies depending on location of sale. For clothing, the entire amount is taxable if the item is over the $110 threshold.

• Sales Transaction A: $100 Blouse. No sales tax applies because blouse is under $110
• Sales Transaction B: $200 Blouse. Sales tax applies to the entire item price; $200.  $200 * 8.875% = $17.75 Sales Tax

1 Comment
Moderator

Re: Info about the clothing sales tax category

The definition of what qualifies as clothing (clothing accessories, work clothing, protective equipment, etc.) varies from state to state, so an item may qualify for the clothing exemption in one state, but not in another.

 

For example, an article of clothing that costs $1,200 is subject to different thresholds in Massachusetts, New York, and Rhode Island, taxable at a special rate in Connecticut, fully taxable in some states, and exempt in others.

 

By properly mapping to the correct clothing tax category, the sales tax feature in QuickBooks Online will ensure that the proper taxability, rate, and threshold rules are applied across all jurisdictions.

 

sales-tax-categories-quickbooks-online_clothes.png

 

1 state taxes luxury clothing at a higher rate

Connecticut

 

4 states provide general exemptions for clothing

Minnesota

Pennsylvania

New Jersey

Vermont

 

16 states have sales tax holidays that provide exemptions for certain articles of clothing for limited periods of time

Alabama

Maryland

Ohio

Texas

Connecticut

Missouri

Oklahoma

Virginia

Florida

Mississippi

South Carolina

Wisconsin

Iowa

New Mexico

Tennessee

Puerto Rico

 

4 states have clothing dollar amount thresholds

Connecticut

$50

New York

$100

Massachusetts

$175

Rhode Island$250


Examples of how the thresholds work:

Note: These calculations are handled automatically with QuickBooks Online.

Example 1 - Massachusetts
Massachusetts has a 6.25% sales tax rate for the entire state. For clothing, only the amount over the $175 threshold is subject to sales tax.

• Sales Transaction A: $100 Blouse. No sales tax applies because blouse is under $175
• Sales Transaction B: $200 Blouse. Sales tax applies only to the portion over the threshold; $25. $200 - $175 = $25 * 6.25% = $1.56 Sales Tax

Example 2 - New York
New York has an 8.875% sales tax rate in NYC and other rates varies depending on location of sale. For clothing, the entire amount is taxable if the item is over the $110 threshold.

• Sales Transaction A: $100 Blouse. No sales tax applies because blouse is under $110
• Sales Transaction B: $200 Blouse. Sales tax applies to the entire item price; $200.  $200 * 8.875% = $17.75 Sales Tax