As an e-commerce seller, you will need to collect sales tax in Massachusetts if you have:
(1) Sales exceeding $100,000 in the prior or current calendar year (economic nexus), or
(2) Physical presence in Massachusetts (physical nexus).
Below, we will highlight some of the basic provisions of Massachusetts sales tax law.
What is the tax rate range for Massachusetts?
State: Massachusetts’s general sales tax rate is 6.25%. Local: Massachusetts does levy local sales tax. Massachusetts Sales and Use Tax for Businesses
Do you have physical or economic nexus in Massachusetts? Physical nexus.
Certain business activities create physical nexus in Massachusetts. If you have physical nexus, you are required to collect and remit sales tax on all taxable sales that are shipped to Massachusetts. Examples of business activities that can create physical nexus in Massachusetts include:
- Having a business location in Massachusetts
- Regularly engaged in the delivery of property or the performance of services within Massachusetts
- Owning or leasing real property within Massachusetts
- Having 1 or more employees located within Massachusetts
- Regularly maintaining a stock of tangible personal property within Massachusetts for sale in the ordinary course of business
- Regularly leases out tangible personal property for use within Massachusetts
M.G.L. c. 64H, § 1 Economic nexus.
Massachusetts recognizes economic nexus for any vendor with $100,000 or more in sales into the state in the prior or current calendar year. Once you have economic nexus established, you will be obligated to collect sales tax from buyers in the state.
- If this threshold is reached during the year, the seller must begin collecting on the 1st of the month that is two months after the threshold is reached.
- A remote seller’s sales through a marketplace are not counted towards the threshold
- A marketplace facilitator includes its own sales and sales on behalf of third-parties to determine if meets the threshold
Remote Seller and Marketplace Facilitator FAQs - Massachusetts
What are examples of sales of taxable items?
- Tangible personal property, unless an exemption applies
- Home appliances
- Leases and rentals of tangible personal property
- Software as a Service (SaaS)
- Sales and Use Tax
What are examples of sales of nontaxable/exempt items?
- Services, unless specifically taxed
- Food for human consumption (except meals sold by a restaurant)
- Clothing less than $175
- Agricultural machinery, equipment, and materials
- Prescription drugs
- Tax-Exempt Items & Sales
Are there any sales tax holidays?
Massachusetts recognizes an annual sales tax holiday in August for all retail items up to $2,500 purchased for personal use. Massachusetts Sales Tax Holiday FAQ
Is Massachusetts a member of the SST (Streamlined Sales Tax)?
Currently, Massachusetts is not a full or associate member of the Streamlined Sales Tax Governing Board (SSTGB).
How to get a sales tax permit / links to register in this state?
You can register online at: Mass Tax Connect.
For more information on Massachusetts rates, see: Massachusetts Sales and Use Tax for Business.