Transactions that are not subject to sales tax

Sales and use taxes do not apply to many transactions. Among the common transactions that are not subject to the sales tax are the following:

• sales or rentals of real property;
• sales of medical care; 
• sales of most food for home consumption;
• sales of prescription and nonprescription medicines;
• sales of educational services;
• sales of most personal services (see for exceptions in New York City);
• sales of professional services;
• sales of capital improvements to real property;
• sales for resale;
• most sales to or by the federal and New York State governments, charitable organizations and certain other exempt organizations;
• sales of machinery, equipment, parts, tools, and supplies used directly and predominantly in manufacturing property for sale;
• sales of fuels and utility services used in manufacturing property for sale;
• sales of tangible personal property used directly and predominantly in experimental research and development activity;
• sales of gas, electricity, refrigeration and steam (and related services) used or consumed directly and exclusively for research and development; and 
• purchases of materials incorporated into buildings owned by an industrial development agency (IDA).

For a list of taxable and exempt property and services and a list of exemption documents, see Tax Bulletin Quick Reference Guide for Taxable and Exempt Property and Services (TB-ST-740).