Legislation was signed into law in 2018 that established an annual sales tax holiday for one weekend each year.
This year, the sales tax holiday will occur on August 17 and August 18, 2019.
On the sales tax holiday weekend, purchases by individuals of most retail items are not subject to the state sales tax.
NOTE: Recent legislation excludes the sale of meals from the annual sales tax holiday.
Qualifications for the sales tax holiday
Who qualifies for the sales tax holiday?
The sales tax holiday applies to individuals purchasing retail items for personal use only. Purchases by corporations or other businesses—or purchases by individuals for business use—remain taxable.
Do all retail items qualify for the sales tax holiday exemption?
No. The following do not qualify for the sales tax holiday exemption:
- Motor vehicles
- Telecommunications services
- Tobacco products
- Marijuana or marijuana products
- Alcoholic beverages, and
- Any single item whose price is more than $2,500.
Do meals qualify for the sales tax holiday exemption?
No. Recent legislation excludes meals tax from the sales tax holiday exemption.
What about internet sales? Do those sales qualify for the sales tax holiday exemption?
Yes. If you order and pay for an eligible item over the internet on the sales tax holiday, Eastern Daylight Time, that item will qualify for the sales tax holiday exemption. No sales tax is due on that purchase, even if delivery of the item occurs after the sales tax holiday weekend.
What about layaway sales?
Layaway sales are not eligible for the sales tax holiday exemption.
Do rentals qualify for the sales tax holiday?
As long as the items rented are not ineligible items, such as motor vehicles or motorboats, individuals may take advantage of the sales tax holiday for rentals of up to 30 days. However, the rental must be paid for in full on the holiday weekend.
Do all retailers have to participate in the sales tax holiday?
Yes. All businesses normally making taxable sales of tangible property in Massachusetts or to purchasers in Massachusetts that are open for business on August 17 and 18 must participate in the sales tax holiday, including internet vendors.
Is there a limit to the retail value to which the sales tax holiday exemption applies?
Yes. The sales tax holiday exemption is limited to eligible sales of items costing $2,500 or less.
What if I spend more than $2,500 on an item?
If you spend more than $2,500 on an item, the entire amount paid for the item is subject to sales tax, not just the amount that exceeds that threshold. There is, however, an exemption with respect to clothing. An item of clothing is generally exempt from the sales tax unless the item costs more than $175. If it does, only the amount over $175 is subject to tax. If on the sales tax holiday, the price of an item of clothing exceeds $2,500, the first $175 is not subject to tax.
What if I purchase multiple items that each cost $2,500 or less, but the total price exceeds $2,500? Are all items eligible for the sales tax holiday exemption?
As long as the price of each individual item is $2,500 or less, you can purchase as many items as you want together, tax-free, even if all the items added together cost more than $2,500.
A business has advertised that a purchase I made prior to the sales tax holiday weekend can be canceled and re-booked on the holiday. Can I do that and avoid paying sales tax?
No. If you put down a deposit on, prepaid for or otherwise promised to pay for an eligible item prior to the sales tax holiday weekend, you can’t cancel your prior purchase and re-book the purchase on the sales tax holiday weekend to avoid the sales tax.
Do I have to take home an item I purchase on the sales tax holiday weekend for that purchase to qualify for the sales tax holiday exemption?
No. As long as you pay for the item in full on the sales tax holiday weekend, you can arrange for delivery of the item after the sales tax holiday weekend.
After the sales tax holiday
What happens if I exchange or return an item once the sales tax holiday has ended?
No tax is due even if the exchange is made after the holiday. You will not be subject to the tax retroactively.
What do I do if I find that I was charged sales tax on an eligible item purchased during the sales tax holiday?
If you were charged tax in error, the business that you bought your item from is responsible for giving you a refund of the tax you paid. You should provide the business with your receipt or other proof of purchase to determine the amount of your refund.
What happens if I am a retailer that accidentally collects sales tax this weekend?
Any sales or use tax erroneously collected on the sales tax holiday weekend must be remitted to DOR. If a customer seeks a refund of tax collected in error from you, you must refund the tax to the customer. If you have already remitted the tax to DOR, you may file an amended return to recover amounts refunded to customers.
How do I report exempt sales on my August return?
On your August Sales and Use Tax Return, you will report the amount of tax not charged on items during the Sales Tax Holiday as “Exempt Sales” [Line 2].