Massachusetts Sales Tax on Services, Installation, etc 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.

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.


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.


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.

Category Exemption Status
Amazon Purchases
Products on TAXABLE
General Clothing EXEMPT *
Food and Meals
Catering TAXABLE *
Grocery Food EXEMPT
Leases and Rentals
Motor Vehicles TAXABLE *
Tangible Media Property TAXABLE
Manufacturing and Machinery
Machinery EXEMPT
Raw Materials EXEMPT
Utilities & Fuel EXEMPT
Medical Goods and Services
Medical Devices EXEMPT *
Medical Services EXEMPT
Medicines TAXABLE
Newspapers and Magazines
Newspapers EXEMPT
Periodicals EXEMPT
Occasional Sales
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
Janitorial Services EXEMPT
Transportation Services 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 *
Digital Products EXEMPT
General Trade-Ins TAXABLE *
Vending Machine Sales
Merchandise TAXABLE *

* See notes in category taxability page for details

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