Poughkeepsie, NY ... Starting March 1st, residents and visitors shopping in Dutchess County shops and stores will not pay sales tax on clothing or footwear items costing less than $110. The sales tax exemption on clothing and footwear was adopted as part of the 2022 County Budget, which provided for and is part of several efforts to deliver sustained tax relief to Dutchess County residents with more than $20 million in annual tax relief, including the largest property tax decrease in County history.
“Sustained tax relief has been a priority for our administration, and I am grateful to the County Legislature for their continued support to provide that relief,” said Dutchess County Executive Marc Molinaro. “This year we delivered the largest property tax cut in County history. We reduced the levy by $5.5 million and cut our tax rate by 10 percent, while continuing to enhance county services. Starting Tuesday, residents and visitors will now pay less when they need to make essential clothing and footwear purchases. Combined, we are delivering $20 million in sustained tax relief.”
In New York State, clothing, footwear, and items used to make or repair exempt clothing which are sold for less than $110 per item or pair are currently exempt from the State’s four percent sales tax. Consumers currently pay the Dutchess County sales tax rate of 3.75 percent and the three-eighths percent Metropolitan Commuter Transportation District (MTA) tax, for a total of 4.125 percent tax on these purchases. Effective March 1st, Dutchess County becomes one of only nine counties in New York to eliminate county sales tax on clothing and footwear items under $110 and the only county in the Mid-Hudson Valley region to do so.
The sales tax exemption is a per-item exemption, so individuals and families purchasing multiple clothing and footwear items will see real savings on these necessary purchases. The following purchase example illustrates the savings as a result of the exemption, as none of the items exceeded $110, therefore no sales tax will be charged.
Dutchess County Legislature Chairman Gregg Pulver said, “At a time when many costs are going up for families, I am very proud that Dutchess County Government is doing all we can to lower costs for our residents. This sales tax exemption helps people hang on to their hard-earned money and also makes Dutchess County an even more attractive shopping destination for visitors. We have worked hard to make smart, conservative fiscal decisions over the years so we can keep providing savings to our citizens.”
Dutchess County retailers were notified of the upcoming sales tax change by the New York State Department of Taxation and Finance. Specific details of the exemption are available online Publication 718-C – Sales and Use Tax Rates on Clothing and Footwear.
New sales tax sharing agreement for 2023-2033
The clothing and sales tax exemption goes into effect as the County is working with the Cities of Beacon and Poughkeepsie to update the current sales tax sharing agreement, which provides millions of dollars in sales tax revenue to local municipalities each year. The current agreement expires in 2023, and requires the authorization of each City Council, the County Legislature, and the NYS Comptroller.
The agreement allows Dutchess County Government to continue to collect a 3.75 percent County Sales and Use Tax, with the Cities of Poughkeepsie and Beacon surrendering their right to receive one-half of the non-state sales and use tax (which equals 1.5 percent) collected within their respective municipalities. (The agreement is among these three parties because under state law, only county and city governments have the right to impose a local sales tax; towns and villages do not have that right.)
The new agreement will be a streamlined agreement that eliminates the complicated formula for sales tax growth contained in the current agreement. The new agreement, which will run from 2023 to 2033, will be a simple percentage formula. Each of the cities will see a graduated increase in the percentage of sales tax received over the term of the agreement, with the City of Poughkeepsie increasing their percentage of sales tax collected from the current 4.59 percent to receiving 6.02 percent by 2030. The City of Beacon will go from its current 2.00 percent to receiving 2.62 percent by 2030. Local towns and villages will continue to share 9.5 percent of total county sales tax collected.
“Over the last 10 years, we have distributed more than $300 million in sales tax to our two cities, 20 towns and eight villages. This new agreement increases the percentage of sales tax the two cities will receive, while ensuring the towns and villages sales tax revenue is protected and grows as sales tax receipts grow,” County Executive Molinaro said.
The City of Beacon Council voted to approve the new agreement on Tuesday, February 22nd. The City of Poughkeepsie Council is expected to vote on the agreement on March 14th. It will then go to the Dutchess County Legislature for vote at the April board meeting.