Massachusetts: Sales Tax Handbook
What purchases are taxable in Massachusetts?
The taxability of various transactions (like services and shipping) can vary from state to state, as do policies on subjects such as whether excise taxes or installation fees included in the purchase price are also subject sales tax. This reference is here to help answer your questions about what is and is not subject to the Massachusetts sales tax.
Contents1.) Taxability of Goods and Services
- General Massachusetts taxability guidelines
- Are services subject to sales tax?
- Is shipping & handling subject to sales tax?
- Are drop shipped items taxable?
Section 1: Taxability of Goods and Services
What transactions are generally subject to sales tax in Massachusetts?
In the state of Massachusetts, sales tax is legally required to be collected from all tangible, physical products being sold to a consumer. Several examples of exceptions to this tax are most food and grocery products(not food served at a restaurant), certain sanitation and health care items, periodicals, clothes which cost less than one hundred and seventy five dollars, and medical devices which have been prescribed.
This means that someone selling textbooks and school supplies would be required to charge sales tax, but an individual who sells coffee and hot chocolate would not be required to charge sales tax on most of their products.
Are services subject to sales tax in Massachusetts?
In the state of Massachusetts, services are not usually taxable. While most services are exempt, there are a few exceptions. For example, a service who's work includes creating or manufacturing a product is very likely considered to be taxable, and thus you would most likely have to pay sales tax on the service.
You can find a table describing the taxability of common types of services later on this page.Top
Are shipping & handling subject to sales tax in Massachusetts?
In the state of Massachusetts, the laws regarding tax on shipping and handling are relatively simple. Essentially, if the item being shipped to the buyer is considered taxable, then the shipping cost is usually considered to be taxable as well, and if the item being shipped is not taxable, then the shipping cost is not considered taxable either. In addition, taxes can also be excluded if the tax is set in good faith to be reasonably similar to the costs of getting the purchased product prepared and delivered to their destination, and if the taxes are separately stated from the cost of the product itself on the invoice.Top
Are drop shipments subject to sales tax in Massachusetts?
"Drop shipping" refers to the common business practice in which a vendor, often in a different state, makes a sale of a product which is shipped to the end-user by a third party supplier hired by the initial vendor. In Massachusetts, drop shipments are generally exempt from sales taxes.
Section 2: Taxability of Various Items in Massachusetts
This table shows the taxability of various goods and services in Massachusetts. If you are interested in the sales tax on vehicle sales, see the car sales tax page instead. Scroll to view the full table, and click any category for more details.
|Products on Amazon.com||TAXABLE|
|General Clothing||EXEMPT *|
|Food and Meals|
|Leases and Rentals|
|Motor Vehicles||TAXABLE *|
|Tangible Media Property||TAXABLE|
|Manufacturing and Machinery|
|Utilities & Fuel||EXEMPT|
|Medical Goods and Services|
|Medical Devices||EXEMPT *|
|Newspapers and Magazines|
|General Occasional Sales||EXEMPT *|
|Motor Vehicles||TAXABLE *|
|Optional Maintenance Contracts|
|General Optional Maintenance Contracts||EXEMPT *|
|Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts||TAXABLE|
|Pollution Control Equipment|
|General Pollution Control Equipment||EXEMPT|
|Software and Digital Products|
|Canned Software - Delivered on Tangible Media||TAXABLE|
|Canned Software - Downloaded||TAXABLE|
|Custom Software - Delivered on Tangible Media||EXEMPT|
|Custom Software - Downloaded||EXEMPT|
|Customization of Canned Software||EXEMPT *|
|General Trade-Ins||TAXABLE *|
|Vending Machine Sales|
* See notes in category taxability page for details
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