Massachusetts Sales Tax Rates

Total Range for 2024

6.25%

Massachusetts department of revenue logo

Why do you need to collect sales tax in Massachusetts?

If you’re selling goods and services in Massachusetts then sales tax might apply! To determine your obligation, you need to understand “nexus,” which ties businesses to states for tax purposes.

Two types of nexus exist:

  1. Physical Nexus: Having a physical presence, like an office, warehouse, or employees in Massachusetts, triggers this type. If you do, you likely need to collect sales tax.
  2. Economic Nexus: This kicks in when your sales within Massachusetts exceed a certain economic threshold. Even without a physical presence, surpassing this threshold requires collecting sales tax.

Is what you’re selling taxable in Massachusetts?

Now that you’ve grasped the basics of Massachusetts’s sales tax and nexus thresholds, let’s delve into whether your specific products or services are taxable.

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How to register for sales tax in Massachusetts

  1. Online Registration (Preferred):
  • This is the quickest and easiest method for new businesses.
  • Go to the Massachusetts Department of Revenue (DOR) website: https://www.mass.gov/sales-and-use-tax-for-businesses
  • Click on “Sales and Use Tax” and then “Register a New Business.”
  • Follow the instructions to complete and submit the online application.
  • You’ll need your business information (legal name, address, EIN/SSN) and start date.
  1. Paper Registration (Alternative):
  • Download the application form: ST-1 Application for a Sales Tax Permit: [invalid URL removed]
  • Print, complete, and mail the application form to the DOR address provided on the form.
  • Include any required documentation with your application.
  1. Processing Time and Next Steps:
  • Processing typically takes 10 business days for online applications and longer for mailed applications.
  • The DOR will notify you by mail of your registration status and provide your Sales Tax Permit number.
  • Once approved, you can begin collecting and reporting sales tax.

How to collect sales tax in Massachusetts

  1. Determine the Tax Rate
  2. Include Tax in Your Prices (Optional):
  • You can choose to:
    • Display prices including tax
    • Display prices before tax and add the tax at checkout.
  1. Point-of-Sale System (POS):
  • If you have a POS system, program it with the correct Massachusetts sales tax rate(s) for your products/services.
  • This automates the tax calculation and collection during sales.
  1. Manual Calculation (Without POS):
  • For manual sales, calculate the tax by multiplying the sales price by the tax rate 
  • Add the calculated tax amount to the sales price and collect the total amount from the customer.
  1. Keep Records
  • Maintain detailed records of your sales and the amount of sales tax collected for each transaction.
  • This is crucial for filing your sales tax returns.
  1. File and Pay Sales Tax
Example:
  • Buying a $20 t-shirt in MA with 6.25% sales tax:
    • Sales tax: $20 x 6.25% = $1.25
    • Customer pays: $20 (price) + $1.25 (tax) = $21.25 (total)

FAQs

Do you have a physical nexus in Massachusetts?

A physical nexus in Massachusetts means your business has a sufficient physical presence in the state to be required to collect and pay sales tax. Here’s how to know if you have one:

  • Physical Presence Examples:
    • Owning an office or warehouse in Massachusetts.
    • Having employees who regularly work in Massachusetts (even remotely if they’re fulfilling orders or providing services to MA customers).
    • Storing inventory in Massachusetts for sales (fulfillment by Amazon warehouses in MA would count).
    • Regularly sending salespeople or representatives into Massachusetts to solicit business.
Do you have an economic nexus in Massachusetts?

Massachusetts has economic nexus rules that require certain out-of-state businesses to collect and pay sales tax, even without a physical presence in the state. Here’s what you need to know about economic nexus in Massachusetts:

  • Threshold: You have economic nexus if your business exceeds $100,000 or more in total sales of tangible personal property delivered into Massachusetts during the previous or current calendar year.
What is use tax in Massachusetts?

In Massachusetts, use tax applies to purchases you make of taxable goods outside the state that you then use, store, or consume within Massachusetts.

Here’s a breakdown of use tax in Massachusetts:

  • Rate: The use tax rate is the same as the Massachusetts sales tax rate, which is generally 6.25%. However, some specific goods like restaurant meals have separate tax rates (e.g., 6.25% meals tax).
  • Who Pays It: You, the consumer, are responsible for paying use tax on out-of-state purchases you use in Massachusetts.
Do you need a seller/reseller permit?

In Massachusetts, there isn’t a separate seller/reseller permit.  Instead, you need a Sales Tax Permit. This single permit covers both:

  • Collecting sales tax: If you have a physical nexus or economic nexus in Massachusetts (see previous explanations for details), you need this permit to collect and pay sales tax on taxable goods you sell to Massachusetts customers.
  • Obtaining a resale certificate: This permit allows you to obtain a resale certificate from your suppliers. With a valid resale certificate, you can avoid paying sales tax on purchases you make for resale (not for personal use).
How to get a sales tax permit/license in Massachusetts?

To get a sales tax permit (aka Sales Tax Permit) in Massachusetts:

  1. Apply online for free. (recommended). This is the faster option.
  2. Alternatively, download a paper application, fill it out, and mail it in (takes longer).
When are Massachusetts's Returns Due?

The due date for filing your Massachusetts sales tax returns depends on your total sales tax liability for a specific period:

  • Over $5,000 per Quarter: If your total sales tax liability for a quarter is more than $5,000, you are required to file electronically monthly.
  • $5,000 or Less per Quarter: If your total sales tax liability for a quarter is $5,000 or less, you can file electronically quarterly.

The filing deadline is generally the 20th day of the month following the end of the filing period.

How to file sales tax in Massachusetts
  1. File and Pay Electronically (Preferred):
  • This is the fastest and most secure method.
  • Go to the Massachusetts Department of Revenue (DOR) website: https://www.mass.gov/sales-and-use-tax-for-businesses
  • Click on “Sales and Use Tax” and then “File and Pay Sales Tax.”
  • Follow the instructions to create an account (if you don’t have one) and submit your return.
  • You can pay electronically through the system using ACH debit or credit card (fees may apply).
  1. Paper Filing (Alternative – Not Recommended):
  • Download the forms:
    • ST-3 Sales and Use Tax Return
    • ST-3 Instructions
  • Complete the forms manually and mail them with your payment to the DOR address provided on the forms.
Is anyone exempt from sales tax in Massachusetts?

Yes, there are certain people and organizations exempt from paying sales tax on their purchases in Massachusetts. Here’s a breakdown:

  • Non-Profits and Qualifying Organizations:
    • Non-profit charitable, educational, and religious organizations can obtain a sales tax exemption certificate from the Massachusetts Department of Revenue (DOR). This allows them to purchase specific goods tax-free (e.g., materials used for their exempt activities).
    • Examples include volunteer fire departments, veteran organizations, and some public libraries.
  • Government Agencies: All levels of government (federal, state, and local) are exempt from paying sales tax on their purchases.
  • Certain Sales:
    • Prepared food purchased from grocery stores: This includes most groceries but excludes prepared meals (taxable) and restaurant takeout (taxable).
    • Prescription drugs and medical devices
    • Gasoline: Subject to a separate gas tax (23 cents per gallon)
    • Clothing costing less than $175: There’s no tax on the first $175 of a single clothing item.

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