Do New York Restaurants Pay Sales Tax on Takeout Packaging?

Containers, cups and wrap that hold the guest’s food can be bought on a resale certificate. Napkins, straws, plastic forks and kitchen supplies stay taxable.

Ryan Speier

Quick answer: Not on packaging that holds the guest’s food, as long as you give the supplier a properly completed resale certificate. In New York, takeout boxes, cups, lids, carry-out bags and sandwich wrap that go to the guest with the food can be bought without sales tax on Form ST-120, Resale Certificate. Napkins, straws, stirrers and plastic forks are still taxable, even though they’re disposable and leave with the order. So are foil, plastic wrap and containers you use to store food in your kitchen.

The certificate is for businesses registered for New York sales tax with a valid Certificate of Authority, and it covers the eligible lines on an invoice, not the whole invoice.

This covers New York State sales tax for restaurants and other places selling restaurant-type food, which the state’s bulletin says includes delis, pizzerias, food courts and street carts. It’s based on Department of Taxation and Finance guidance read October 22, 2026, and these are long-standing rules, not a new change: the restaurant purchases bulletin was issued April 8, 2019, and the packaging memo it links to dates to August 10, 1981. The bulletin pages carry an October 16, 2026 update stamp that doesn’t say what changed. The department calls its bulletins simplified guidance, accurate as of the date issued, that doesn’t cover every situation. This isn’t tax advice; your accountant decides how your purchases are reported.

The test: does it hold the food, and does the guest get it?

The department’s packaging memo, TSB-M-81(12)S, sets two conditions:

Disposable packaging and wrapping products which are purchased for use in restaurants, diners, fast food operations, vending machine operations, and similar establishments are exempt from sales and use tax when they support or encompass food or drink (for on or off premises consumption) and are transferred to the customer with the food or drink.

Both have to be true. A pizza box, a soup cup and its lid, a french fry sleeve, a carry-out bag and the paper around a sandwich pass. Disposable plates and cups pass too, even when the guest eats in, because the memo covers food eaten on or off the premises.

Disposable isn’t the test. Napkins, straws, stirrers, toothpicks, placemats and plastic forks, knives and spoons go to the guest, but they don’t hold the food. The restaurant purchases bulletin and the memo both list them as taxable.

The same roll of foil can go either way. The memo lists foil and paper wrapping as exempt when they’re wrapped around food that goes to the guest. The bulletin lists foil, plastic wrap and food storage containers as taxable when they’re used up in the kitchen. The answer depends on how you’ll use the item, not what the supplier’s catalog calls it.

Neither list is complete. The memo says its examples “are not all inclusive, but should act as a guide.” If an item isn’t clearly on one side, ask your accountant before you claim it.

Who can give a supplier Form ST-120

Part 1 of the current form (revision 1/26) is headed “To be completed by registered New York State sales tax vendors” and asks for your valid sales tax identification number. The instructions say the certificate is for a purchaser registered as a New York State sales tax vendor with a valid Certificate of Authority. A federal EIN doesn’t make you a registered vendor. If you haven’t registered for New York sales tax yet, do that first. Our business setup checklist lists it with the other registrations to finish before you take money.

A few rules from the form and the department’s exemption certificate bulletin, TB-ST-240:

  • Fill in every entry. The date, both businesses’ names and addresses, your sales tax identification number, what your business sells, and the signature of the owner, a partner or another authorized person.
  • Give it to the supplier early. TB-ST-240 says within 90 days of the purchase, but preferably at the time of the sale. Send it before the first delivery.
  • The supplier can say no. A seller may refuse a certificate even when it’s correct, and then has to charge you tax. TB-ST-240 points to a refund application (Form AU-11) or a credit on your sales tax return. Ask your accountant which applies.
  • Temporary vendors use single-use certificates. The form says a temporary vendor can’t issue a blanket certificate. It defines a temporary vendor as one that makes taxable sales in no more than two consecutive quarters in any 12-month period (show and entertainment vendors are excluded). If you’re running a short pop-up, check how you’re registered.

You sign the form certifying that it’s true, and it warns that misuse brings tax, substantial penalties and interest. It also says that if you buy something for resale and then use or consume it yourself in New York, you have to report and pay that tax directly to the state.

One certificate doesn’t make the invoice tax-free

Marking the blanket box lets one certificate cover “all purchases of the same general type of property or service purchased for resale” from that supplier, so you don’t send a new one with every order. It doesn’t cover the napkins, plastic utensils or cleaning supplies on the same invoice. The form says you “may not use this certificate to purchase items or services that are not for resale.”

The bulletin’s taxable list for restaurants also includes kitchen equipment, reusable plates, glassware and silverware, cleaning supplies and office supplies. Having a certificate on file with a supplier doesn’t change any of that. If your address, identification number or other details change, give the supplier an updated blanket certificate.

Containers you’ll use both ways

Deli containers, foil pans and rolls of foil often do both jobs: some go out with guest orders, some hold prep in the walk-in. Only what goes to the guest meets the memo’s test, and neither source gives a formula for splitting a case. Don’t claim the whole case because some of it will go out the door.

  • Decide the intended use before you order, and write it down.
  • Order the kitchen quantity as its own line, ideally a different size or item number, so the invoice shows the split.
  • Put only the guest packaging under the certificate.
  • If you can’t say how a line will be used, leave it taxable and ask your accountant.

The bulletin says your records must establish the taxable status of every purchase and be kept for at least three years. If guest packaging bought on the certificate later ends up holding prep in the kitchen, the form says you report and pay that tax yourself. Ask your accountant how to track it.

A fictional opening order

A fictional counter-service sandwich and soup shop in New York is registered for sales tax and holds its Certificate of Authority. Its first paper-goods order from one supplier has these lines:

  • Kraft takeout boxes for guest orders. On the certificate. They hold the food and go to the guest.
  • Hot cups and lids for soup and coffee. On the certificate, for eat-in and takeout alike.
  • Deli paper that wraps every sandwich handed over the counter. On the certificate. It’s wrapping that goes out with the food.
  • Napkins and wrapped plastic forks. Taxable. Guests take them, but they don’t hold the food.
  • Plastic wrap and quart containers for the walk-in. Taxable. They’re used up in the kitchen.
  • Degreaser and sanitizer. Taxable cleaning supplies.

The owner also wants pint deli containers for soup to go and for prepped garnishes. They order two lines: the to-go quantity on the certificate and the prep quantity taxed. If the supplier can’t split them, the whole line stays taxable until the accountant says otherwise.

The owner gives the supplier a blanket ST-120 before the first delivery. When the first invoice arrives, they check that tax appears on the napkins, forks, wrap, storage containers and cleaning supplies, and not on the boxes, cups, lids, deli paper or to-go containers. If the invoice taxes everything or nothing, they call the supplier before paying, the same way they’d query a wrong quantity or price. Our guide to ordering and checking supplier invoices covers that part.

A note to send your packaging supplier

Before you send: Use this only for a restaurant in New York State that is registered for New York sales tax with a valid Certificate of Authority, and only for packaging that holds food or drink and goes to the guest with it. Don’t send it if you aren’t registered yet, and don’t list an item until you’ve decided how it will be used. If you’re a temporary vendor, change “blanket” to “single-use” and send a certificate with each order.

Subject: Resale certificate for customer packaging only

Hi [name],

We’re a restaurant in New York State, registered for New York sales tax with a valid Certificate of Authority. Attached is our completed Form ST-120, Resale Certificate, marked [blanket / single-use]. It covers only the packaging we hand to customers with their food or drinks: [takeout boxes, cups, lids, carry-out bags, food wrap].

Please keep charging sales tax on everything else we buy from you, including napkins, straws, plastic utensils, kitchen plastic wrap and foil, food storage containers and cleaning supplies. Where we buy an item for both uses, we’ll order the kitchen quantity as a separate line, and that line stays taxable.

Could you show the certificate items and the taxable items as separate invoice lines? And please tell us before our first delivery on [date] if you can’t accept the certificate or need it in a different format.

Thanks,

[name, restaurant, account number]

If the answer is no: If the supplier won’t accept the certificate or can’t separate the lines, pay the tax as invoiced and ask your accountant about a refund or credit.

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