If you’ve been waiting to spend some hard-earned money on a major purchase, this weekend may be the time to finally treat yourself.
The state’s annual sales tax holiday weekend is returning on Aug. 13 and 14. During this time, shoppers in Massachusetts do not have to pay the regular 6.25% sales tax on retail items that they are normally subject to. Lawmakers made the tax holiday an annual occurrence in 2018. Earlier this summer, the legislature decided on this weekend for the holiday. Last year’s tax holiday also came in mid-August.
Here’s what you need to know.
The tax holiday does not apply to any single item whose price is more than $2,500.
During these two days, the tax holiday only applies to retail items bought for personal use by individuals. Purchases made by businesses do not qualify, and neither do purchases made by individuals for business use.
Some purchases are still taxable. This includes meals, motor vehicles, motorboats, and telecommunications services such as prepaid calls. In addition, 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 would prefer to stay home in order to beat the heat or avoid COVID exposure, they can still participate. Items purchased over the internet are eligible for the tax exemption. Online orders must be placed during the tax holiday weekend. No sales tax will be due even if the item is delivered after the holiday.
Layaway sales, however, do not qualify for the tax exemption.
What about rentals? If one rents an item that does qualify, they can use the sales tax holiday for rentals up to 30 days. The rental must be paid for in full during the holiday weekend. Motor vehicle and motorboat rentals are not included.
All businesses that normally make taxable sales of tangible property in Massachusetts or to purchasers in the state and are open for business during Aug. 13 and 14 must participate in the tax holiday.
What other limitations are there?
The tax exemption only applies to items costing $2,500 or less. If an item that costs more is purchased, the entire amount paid is subject to sales tax, not just the amount that exceeds $2,500.
How do clothing sales factor in? In Massachusetts, clothing is generally exempt from sales tax anyway, unless it is sold for more than $175. The amount that exceeds $175 is then taxable.
During the holiday, if a clothing item costs less than or equal to $2,500, 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 subject to tax. The rest, however, would be.
The $2,500 threshold only applies to individual items, not multiple purchases. For example, if a person buys multiple items that each cost $2,500 or less, but the total price is more than $2,500, all the individual items would still be exempt from a sales tax. Shoppers can combine as many items as they want.
Some businesses may advertise that shoppers can cancel previous purchases they made prior to the holiday and re-schedule them for this weekend. But the state has said that people cannot cancel their prior purchases and re-book them for the holiday weekend if they already put down a deposit on, prepaid for, or otherwise promised to pay for an eligible item.
If shoppers buy an item during the tax holiday, they don’t necessarily need to take it home during that time period. If it’s been paid in full during the holiday, one can arrange for delivery at a later date.
After the tax holiday
If one exchanges or returns an item once the holiday has ended, no tax is due. Shoppers won’t be subject to the sales tax retroactively.
If a shopper discovers that they were incorrectly charged sales tax on an eligible item purchased during the holiday, the business that sold it to them is responsible for issuing a refund.
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