If you’ve been waiting to spend some hard-earned money on a major purchase, maybe this weekend is the time to finally treat yourself.
August 13th and 14th is the state’s annual sales tax holiday weekend. During this time, Massachusetts buyers will not be required to pay the regular 6.25% sales tax on retail items to which they are normally subject. Legislators made the 2018 tax holiday an annual event. Earlier this summer, lawmakers designated this weekend for the public holiday. Last year’s tax holiday also took place in mid-August.
Here’s what you need to know.
The tax exemption does not apply to individual items priced more than $2,500.
During these two days, the tax exemption only applies to retail items purchased by individuals for personal use. Purchases made by businesses do not qualify, nor do purchases made by individuals for business purposes.
Some purchases are still taxable. This includes meals, motor vehicles, motor boats and telecommunications services such as prepaid calls. Also, energy purchases for natural gas, steam and electricity are not included in the holiday. Tobacco products, marijuana products and alcoholic beverages remain taxable this weekend.
If shoppers prefer to stay at home to brave the heat or avoid COVID exposure, they can still attend. Items purchased over the internet qualify for the tax exemption. Online orders must be placed during the tax holiday weekend. Even for deliveries after the holiday, no sales tax is due.
However, interstock sales do not qualify for the tax exemption.
What about rents? If someone rents a qualifying item, they can take advantage of the sales tax exemption for rentals up to 30 days. Rent must be paid in full during the holiday weekend. Car and motor boat rentals are not included.
Any business that normally makes taxable sales of tangible property in Massachusetts or to state buyers and is open for business on August 13 and 14 must participate in the tax exemption.
What other restrictions are there?
The tax exemption applies only to items costing $2,500 or less. If an item is purchased that costs more, the entire amount paid is subject to sales tax, not just the amount in excess of $2,500.
How are sales of clothing accounted for? In Massachusetts, clothing is generally exempt from sales tax anyway unless it sells for more than $175. The amount in excess of $175 is then taxable.
If an item of clothing costs less than or equal to $2,500 during the holiday, the entire amount is not subject to tax. If the price of an item of clothing is more than $2,500, the first $175 is not taxable. But the rest would be.
The $2,500 threshold only applies to single items, not multiple purchases. For example, if a person purchases multiple items that each cost $2,500 or less, but the total price is more than $2,500, all of the individual items would still be exempt from sales tax. Buyers can combine as many items as they like.
Some businesses may advertise that shoppers can cancel previous purchases made before the holidays and move them to this weekend. However, the state has said people cannot cancel their previous purchases and re-book for the holiday weekend if they have already paid a deposit, prepaid or otherwise promised to pay for an eligible item.
If buyers buy an item during the tax exemption, they don’t necessarily have to take it home during that time. If it has been paid for in full during your holiday, you can arrange for delivery at a later date.
After the tax exemption
There are no taxes for exchanges or returns after the end of the holiday. Buyers are not retrospectively subject to sales tax.
If a buyer finds that they were incorrectly charged sales tax on an eligible item purchased during the holiday, the company that sold it to them is responsible for issuing a refund.
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