What Use Tax Actually Is

Use tax is the mirror image of sales tax, imposed under NY Tax Law § 1110. When you buy something in New York, the retailer collects sales tax at the register. But when you buy from an out-of-state seller who doesn’t collect New York tax? You’re technically supposed to self-report that tax on your return. That’s use tax.

The rate matches your local sales tax rate. The state portion is 4%, but your county and city add their own. In New York City, the combined rate is 8.875%. In most of the Hudson Valley, it’s 8%. Buffalo and Erie County come in at 8%. These rates shift occasionally, so check the NY Tax Department’s rate tables if you want the exact number for your county.

The concept has been around for decades. What’s changed is how often it applies in practice.

Marketplace Facilitator Laws Changed Everything

Starting June 1, 2019, New York requires marketplace facilitators (Amazon, eBay, Etsy, Walmart.com) to collect and remit sales tax on behalf of their third-party sellers under NY Tax Law § 1101(b)(8-e). This was a big deal. Before that law, buying a phone case from a small seller on Amazon might not have triggered any tax collection. Now it does, automatically.

So if you’re buying most of your stuff through major online platforms, they’re already collecting New York sales tax. You don’t owe use tax on those purchases. The receipt or order confirmation will show the tax line item.

Where use tax still applies: purchases directly from small out-of-state retailers with no New York nexus, items bought while traveling in states with lower (or no) sales tax, and purchases from overseas sellers. Think a specialty bike part from a small shop in Oregon, or a handmade rug bought on vacation in New Hampshire.

How to Calculate What You Owe

The Lookup Table Method

New York doesn’t expect you to keep receipts for every out-of-state purchase. The IT-201 instructions include a use tax lookup table based on your income. If your income is between $50,000 and $74,999, for instance, the suggested amount is $15. Between $100,000 and $149,999, it’s $23. These are deliberately low numbers.

For most filers, the lookup table is fine. It’s essentially New York saying: “We know you bought a few things online from non-collecting sellers. Just pay this small amount and we’ll call it even.”

When You Should Report Actual Amounts

The lookup table has a catch. It only covers small, routine purchases. If you made a large out-of-state purchase where no tax was collected, you need to report the actual tax owed instead. We’re talking:

• Furniture shipped from out of state — a $3,000 couch from a North Carolina manufacturer means roughly $240-$265 in use tax depending on your county
• Electronics from non-collecting sellers — less common now, but still happens with some specialty retailers
• Vehicles, boats, or aircraft — these have their own reporting requirements, but use tax still applies
• Jewelry or art purchased at out-of-state shows — the $8,000 painting you bought at a gallery in Miami doesn’t come with NY tax built in

If you have both small routine purchases and one big-ticket item, add the lookup table amount to the actual tax on the large purchase.

Common Mistakes on Line 64

Leaving it blank is the most common mistake. The second most common? Entering a number that’s way too high because you calculated use tax on Amazon purchases where tax was already collected. Check your order history. If you see a “tax” line item on the receipt, that purchase is covered. Don’t double-count it.

Another mistake: forgetting that use tax applies to services too, not just physical goods. Certain digital products and services purchased from out-of-state providers can trigger use tax obligations under NY’s digital products guidance, though the rules here get complicated fast.

One thing that catches people off guard: if you moved to New York and brought items you’d purchased in a no-tax state within the prior year, those items can technically be subject to use tax. This mostly matters for high-value items like furniture sets or expensive electronics.

How This Connects to Your IT-201

Line 64 feeds directly into your total tax on the IT-201. It gets added to your income tax from Line 39 and any other taxes to produce your total tax liability. That total then gets compared against your payments and withholding to determine whether you get a refund or owe a balance.

For most W-2 employees, Line 64 adds somewhere between $10 and $50 to the total. It won’t make or break your return. But for someone who furnished an entire apartment with out-of-state purchases, it could be a few hundred dollars. Understanding the taxable income computation and the standard deduction that feeds into it gives you the full picture of how your total state obligation comes together.

Sources & References

• NY IT-201 Instructions — Line 64 Use Tax (tax.ny.gov)
• NY Tax Law § 1110 — Imposition of Compensating Use Tax (nysenate.gov)
• NY Sales and Use Tax Rates by Jurisdiction (tax.ny.gov)
• Tax Bulletin: Sales of Digital Products (tax.ny.gov)
• NY Tax Law § 1101 — Marketplace Facilitator Definitions (nysenate.gov)