Starting March 1st, 2022 residents and visitors shopping in Dutchess County will not pay sales tax on individual clothing or footwear items costing less than $110. This cut in sales tax was first announced in October 2021, and adopted when Dutchess County passed its budget in December 2021. Sales tax generated from Beacon continues to be forfeited to Dutchess County - meaning the City of Beacon does not collect the money generated from sales tax to spend at its digression.

For decades, the decision for Beacon, Poughkeepsie and other municipalities in Dutchess County has been to funnel sales tax money to Dutchess County, and receive negotiated payments from Dutchess County in return. The dollar amount of sales tax generated from Beacon has not been disclosed by Dutchess County or New York State, as reported by A Little Beacon Blog, and continues to not be disclosed during Beacon’s recent negotiations with Mayor Lee Kyriacou in 2022 and signed legislation to continue the practice.

But First - The Benefit For Shoppers

According to Dutchess County’s press release from Dutchess County Executive Marcus Molinaro sent 2/28/2022: “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.”

“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.”

This means that every item in a store that is clothing or footwear and is under $110 will not be charged sales tax. Shops that ring their sales up manually will need to remember to do this when writing out the receipt. Shops that use point of sale (POS) systems and bookkeeping software like QuickBooks will have an easier time of assigning what products within their inventory have sales tax attached.

Different Sales Taxes Attached To Each Purchase In New York State

There are different taxes attached to retail sales. “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 4% sales tax,” according to Dutchess County’s press release.

“Consumers currently pay the Dutchess County sales tax rate of 3.75% and the 3/8th% Metropolitan Commuter Transportation District (MTA) tax, for a total of 4.125% tax on these purchases,” the press release outlined. “Effective March 1st, 2022, Dutchess County becomes one of only 9 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.”

Those counties are or have been: Chautauqua County, Chenango County (outside the following) Norwich (city), Columbia County, Delaware County, Dutchess County, Greene County, Hamilton County, Tioga County, and New York City.

The sales tax exemption is a per-item exemption and doe snot include the 3/8th% MTA tax.

According to the press release, 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.

Details Of Type Of Clothing Exempt

According to the legislation, “the exemption applies only to clothing and footwear worn by humans. It also applies to most fabric, thread, yarn, buttons, snaps, hooks, zippers, and similar items that become a physical component part of exempt clothing, or that are used to make or repair exempt clothing.”

Items not included in the exemption include costumes or rented formal wear; items made from pearls, precious or semi-precious stones, or imitations; athletic equipment; or protective devices, such as motorcycle helmets.

What This Means For Sales Tax Collected From Beacon

New sales tax sharing agreement for 2023-2032 have been negotiated and are being signed into law. The dollar amount of sales tax generated from stores in Beacon has not been disclosed to the public by Mayor Kyriacou, who very briefly briefed the City Council at a Workshop meeting in February 2022, and more in depth at the following meeting, where the renegotiated rate was unanimously voted Yes on.

According to Dutchess County’s 2/28/2022 press release announcing this new sales tax cut: “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% 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%) 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% to receiving 6.02% by 2030. The City of Beacon will go from its current 2.00% to receiving 2.62% by 2030. Local towns and villages will continue to share 9.5% of total county sales tax collected.

“Over the last 10 years, we have distributed more than $300 million in sales tax to our 2 cities, 20 towns and 8 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.”

Generated Sales Tax Grew In 2021

According to a press release made by Dutchess County Executive Marcus Molinar’s office on 10/13/2021: “Dutchess County has seen revenues rebound strongly in 2021, with sales tax receipts well exceeding original projections year-to-date and continued federal reimbursement for many of the COVID-19 expenses as well as American Rescue Plan (ARP) funding. This has enabled the County to fill many of the positions that had been held vacant this year and restore full position funding in the 2022 Executive Budget, expand and enhance programs, while also reducing the property tax levy – the amount collected from property taxpayers.”

While Dutchess County indicates that they know the sales tax number generated to them by surrounding municipalities who have forfeited their right to collect their own sales taxes, the totals for each municipalities continues to not be disclosed by Dutchess County, or Beacon’s Mayor Lee Kyriacou, if that number was disclosed to him while negotiating with the county on the rate.

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.”

Knowing the sales tax number generated by each municipality would help all Dutchess County residents know if their municipality were getting a good deal from the County when being cut a check to be used at each municipality’s digression, in addition to being provided services by Dutchess County.