Massachusetts Sales Tax: Common and Unusual Exemptions
- Sales Tax
- June 6, 2016 | Bethany McDonald
The state of Massachusetts is best known for its historical landmarks and universities, as well as its vacation-friendly seaside villages and local cuisine. It’s also home to some of the best hospitals in the world and several Fortune 500 companies, including Liberty Mutual, Raytheon, Staples, TJX, EMC, and Boston Scientific.
After several years of tax reforms, the state previously nicknamed “Taxachusetts” is now considered relatively business-friendly, with Boston welcoming several major companies and startup firms to its up-and-coming Seaport District, including GE and Vertex Pharmaceuticals. Despite the Bay State’s friendlier tax policies, businesses can still take advantage of exemptions to reduce their tax burden.
Massachusetts imposes a 6.25 percent sales tax on the sale of most tangible items. However, the state offers exemptions on a range of goods and services, as well as for certain organizations and types of sales. Common exempt goods include food and clothing, periodicals, and health care items. Goods for resale are also exempt from sales tax. Certain groups, such as nonprofit organizations, government agencies, and school districts also benefit from sales tax exemptions when purchasing or selling certain items.
If you’re an ecommerce business that doesn’t have nexus in Massachusetts, you don’t need to collect sales tax from Massachusetts customers; rather, it is the responsibility of the customer to remit sales taxes for out-of-state purchases. If you do have nexus in the Bay State, you are required to register your business and collect sales tax on taxable items.
There are several strange sales tax exemptions in Massachusetts. For example, while breath-freshening candies and non-medicated cough drops are exempt from sales tax, antacids and supplements are taxable. Furthermore, while bathing suits are exempt, bathing caps are taxable. Check out the following list to see if your business can take advantage of some odd -- but legitimate -- exemptions.
- Vending machines and “honor snack trays”: While food and beverages provided by a restaurant is considered taxable, snacks and candy sold through a vending machine or “honor snack tray” (an arrangement in which snacks or candy are available in an open tray for in an establishment that does not normally sell food and for which payment is made on the honor system) for less than $3.50 is exempt from sales tax.
- Costumes: Any type of costume, including adult and child novelty costumes, is tax-exempt.
- Sewing goods: While sewing goods, such as buttons, elastics, fabric, thread, yarn, and zippers are tax-exempt, sewing equipment, including patterns, embroidery hoops, needles, pins, thimbles, tape measures, and scissors, are taxable.
- Specialty medical equipment: Rentals, sales, and repairs of certain specialty medical equipment, such as incubators, hospital beds for home use, pacemakers, life-sustaining resuscitators, and ultrasonic nebulizers are exempt from sales tax only if prescribed by a doctor.
- Flags: US flags are exempt from sales tax in Massachusetts.
Do you have other questions regarding Massachusetts sales tax exemptions? Check out our Modern Guide to Massachusetts Sales Tax.