Are Clothes Taxed? It Depends on Your State

Sales tax on consumer goods is a common feature of commerce across the United States, yet its application often varies significantly depending on the item purchased and the jurisdiction where the transaction occurs. A frequent question for consumers involves whether clothing is subject to this tax, a query that reveals the intricate nature of state and local tax laws. Unlike federal taxes, sales tax is primarily a state and local matter, leading to a patchwork of regulations that can make understanding the true cost of clothing purchases complex. The answer to whether clothes are taxed is rarely a simple yes or no, as it depends heavily on specific rules set by individual states and sometimes even local municipalities.

Understanding Sales Tax on Clothing Purchases

Sales tax operates as a consumption tax, meaning it is applied to the sale of goods and services. State and local governments levy these taxes, not the federal government, and retailers are responsible for collecting the tax at the point of sale from consumers. The collected funds are then remitted to the appropriate taxing authorities. In most states with a sales tax, the general principle dictates that tangible personal property, which includes most clothing items, is subject to sales tax by default.

The application of sales tax to clothing is generally straightforward in states where it is uniformly applied to all retail goods. However, this general rule has numerous exceptions and specific provisions, particularly concerning clothing. Unless a specific exemption, such as a price threshold or a sales tax holiday, is in place, clothing purchases will be taxed at the standard state and local rates.

State-Specific Sales Tax Rules

The taxability of clothing varies considerably across different states, presenting a diverse landscape for consumers and retailers alike. Several states offer broad exemptions for clothing purchases, providing significant savings. For instance, Delaware, Montana, New Hampshire, and Oregon do not impose a statewide sales tax on any goods, including clothing, making all apparel purchases tax-free in these locations. Beyond these states, others specifically exempt clothing from sales tax altogether, such as Minnesota, New Jersey, Pennsylvania, and Vermont, which generally do not tax clothing.

Other states implement partial exemptions, where clothing is exempt only if its price falls below a certain threshold. In New York, for example, most clothing and footwear items priced under $110 per item are exempt from state sales tax. However, if an item costs $110 or more, the entire price becomes subject to the state’s sales tax, and local taxes may still apply even to items below this threshold in some areas.

Similarly, Massachusetts exempts individual clothing and footwear items priced at $175 or less. For items exceeding $175, sales tax is applied only to the portion of the price above the $175 threshold. Rhode Island also has a partial exemption, with clothing and footwear exempt if the sales price is $250 or less per item, and only the amount exceeding $250 is taxed if the item is more expensive.

Sales tax holidays represent another way states adjust tax policies for clothing, typically occurring for a limited period each year. These holidays often coincide with back-to-school shopping seasons, usually in July or August, allowing consumers to purchase eligible items, including clothing and school supplies, free of sales tax. During these periods, states often set per-item price limits for exempt clothing, which can range from $100 to $500, to ensure the exemption primarily benefits everyday purchases. These temporary exemptions provide a financial break for families and can stimulate retail activity.

In the remaining states that levy a sales tax and do not have specific exemptions or holidays for clothing, apparel is generally taxed at the standard state and local sales tax rates. This means that a shirt, a pair of pants, or shoes are treated like most other consumer goods for taxation purposes. Consumers in these states will pay the full applicable sales tax on their clothing purchases, similar to how they would for other taxable items. Understanding these state-specific nuances is important for consumers to accurately anticipate the total cost of their clothing purchases.

Special Scenarios for Clothing Sales Tax

The application of sales tax to clothing extends beyond in-store purchases and general exemptions to encompass various special scenarios. Online purchases of clothing, for instance, have seen significant changes in sales tax collection practices following the 2018 Supreme Court decision in South Dakota v. Wayfair. This ruling eliminated the requirement for a physical presence in a state for businesses to be obligated to collect sales tax. Consequently, most online retailers are now required to collect sales tax on purchases based on the buyer’s location if they meet certain economic nexus thresholds, typically defined by sales volume (e.g., $100,000) or transaction count (e.g., 200 transactions) into a state. This means that clothing purchased online is generally subject to the same sales tax rules as items bought from a brick-and-mortar store in the buyer’s state.

Sales tax on used clothing also presents specific considerations, depending on the seller. When used clothing is purchased from non-profit organizations or charitable thrift stores, it is generally not subject to sales tax. This exemption often stems from the charitable mission of these entities, which are typically not required to collect sales tax on their sales. However, if used clothing is purchased from for-profit consignment shops or online resale marketplaces, sales tax may apply, depending on the seller’s business model and the state’s specific regulations for such transactions.

Handling sales tax during returns and exchanges of clothing involves specific procedures to ensure accurate tax accounting. When a customer returns an item for a refund, the sales tax originally paid on that item is typically refunded along with the purchase price. If an item is exchanged for another, the sales tax implications depend on the price difference between the items; tax may be re-calculated or adjusted based on the new item’s value. Some states impose time limits, such as 90 to 180 days, within which a return must occur for the sales tax to be fully refundable.

Certain types of apparel may also have unique sales tax classifications. While general clothing items are often exempt or partially exempt in some states, accessories like jewelry, handbags, and belts are frequently taxable regardless of price. Similarly, items primarily designed for athletic activity or protective use, such as specialized sports uniforms or safety equipment, are often treated differently from everyday clothing and may be taxable even if general apparel is not. Some states may also apply luxury taxes to very high-priced clothing items, exceeding thresholds such as $1,000, subjecting them to a higher tax rate than standard apparel.