At the state level, the Massachusetts sales tax rate is 6.25%. Massachusetts doesn't allow cities or counties to add their own general sales taxes on top, with the exception of an additional local tax on prepared food in some cities. If you’re a business operating in or selling into Massachusetts, you’ll first need to understand when nexus begins to apply and makes you responsible for collecting and remitting MA sales tax. Beyond that, you’ll need to familiarize yourself with what goods and services are and are not subject to Massachusetts sales tax.

Below, we explain how sales tax in Massachusetts works and how your business can stay compliant.

Highlights

• Massachusetts has a flat 6.25% sales tax rate that applies statewide. No local general sales taxes are permitted.

• Out-of-state businesses must collect and remit Massachusetts sales tax once they exceed the economic nexus threshold, even if they have no physical presence in the state.

• Certain categories follow specific rules, including clothing exemptions, prepared food, and software.

What is the Massachusetts sales tax rate?

Massachusetts has a statewide sales tax rate of 6.25%. Unlike most states, Massachusetts doesn't let cities or counties add their own general sales tax on top.

Massachusetts does allow cities and towns to impose an additional meals excise of 0.75%, for a combined tax rate of 7.00% on meals. There’s also an optional local marijuana tax of 3.00%.

How does Massachusetts’s sales tax work for businesses?

If you sell taxable goods or services into Massachusetts, you're required to collect and remit sales tax once you establish nexus in the state. Massachusetts recognizes two kinds of nexus: physical and economic.

Physical nexus is the traditional business presence: an office, warehouse, employees, or other physical presence in the state.

Economic nexus came into effect after the Supreme Court's 2018 South Dakota v. Wayfair decision. Massachusetts requires out-of-state sellers to collect and remit sales tax once they exceed $100,000 in sales of services or tangible personal property into the state in a calendar year.

When you've established nexus in Massachusetts, follow these steps to stay compliant with sales tax:

• Register with the Massachusetts Department of Revenue (DOR) through MassTaxConnect.

• Collect 6.25% on all taxable transactions in Massachusetts.

• File and remit either monthly, quarterly, or annually based on your tax liability.

• Keep records of all sales, exemption certificates, and tax collected for at least three years.

Sales tax returns are generally due on the 20th of the month following the close of the filing period. Remote sellers and marketplaces are required to file sales and use tax returns monthly by the 30th day of the following month.

Marketplace facilitators (those who run internet platforms that enable third-party sales) that qualify as remote sellers are required to collect and remit sales and use tax on those transactions when the total of all such sales exceeds $100,000 per calendar year. So if you sell through a marketplace such as eBay or Etsy, the platform should handle sales tax collection.

What goods and services are taxable in Massachusetts?

Most goods and services are taxed at 6.25% in Massachusetts. But several categories have specific rules that affect whether sales tax applies.

Here are categories that have specific tax rules to pay attention to:

• Clothing: Apparel items priced at $175 or less per item are exempt. Above $175, tax applies only to the portion above that amount.

• Food: Prepared food sold by restaurants and similar establishments is taxable at 6.25%. Fried chicken at a restaurant is taxable; raw chicken from the grocery store isn't.

• Local meals tax: Cities and towns can impose an additional meals tax of up to 0.75%, for a combined maximum sales tax rate of 7.00%. Many large Massachusetts cities have adopted it, including Boston, Worcester, Springfield, and Cambridge.

• Software: Sales of standardized software are taxable, even if delivered electronically, but custom software is generally exempt. Software-as-a-service (SaaS) sales tax sits in murkier territory; if SaaS revenue is part of your business, verify current guidance directly with the DOR or a tax advisor.

Businesses processing transactions across multiple product categories and jurisdictions must pay attention to when each rate applies. Stripe’s sales tax calculator can help you determine the correct rate with address-level accuracy.

What are the sales tax exemptions in Massachusetts?

Massachusetts's exemption list is long and quite specific. Take care to avoid taxing exempt sales or missing taxable ones.

These are some common exemptions to sales tax in Massachusetts:

• Groceries: Unprepared food for home consumption is exempt. Meals sold by restaurants are taxable.

• Healthcare items: These are exempt. Examples include prescription drugs, diapers, and tampons.

• Professional services: Services including accounting, insurance, legal, medical, automotive repair, and haircutting are exempt.

• Clothing: Any item of clothing priced at $175 or less is untaxable. Clothing above $175 per item is taxed on the amount exceeding $175.

• Residential utilities: Electricity and gas used for residential purposes are exempt from sales tax.

• Newspapers and periodicals: These are exempt from sales tax.

Sales to qualifying nonprofits and government entities are exempt with a valid exemption certificate submitted before the transaction. Manufacturing machinery used directly in production is also exempt for qualifying manufacturers.

If a customer claims an exemption, get the certificate before the sale. Massachusetts allows the DOR to hold you liable for uncollected tax if you can't produce documentation at audit. The one practical relief: blanket exemption certificates are valid in Massachusetts, so a qualifying buyer can submit one certificate covering all future purchases rather than a new form each time.

What are Massachusetts’s sales tax rates by city?

Because Massachusetts has no local general sales tax, every city in the state charges 6.25% on taxable goods. The rate is the same whether your Massachusetts business is selling in Boston or Barnstable.

Cities and towns can impose an additional meals tax of up to 0.75%, for a combined maximum sales tax rate of 7.00% on prepared foods. Here are some of the cities that add the extra meals tax.

What are Massachusetts’s sales tax rates by county?

Massachusetts has 14 counties, and none impose an additional local sales tax. Every county charges 6.25% on taxable goods.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Stripe Tax helps you monitor your obligations and alerts you when you exceed a sales tax registration threshold based on your Stripe transactions. In addition, it automatically calculates and collects sales tax, VAT, and GST on both physical and digital goods and services—in all US states and in more than 100 countries.

Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful API.

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: Let Stripe manage your global tax registrations and benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.